What is the Difference between income effect and substitution effect?

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1093958

2026-03-14 02:10

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Income effect-change in the amount that consumers will buy because their income changed.

substitution effect-change in the amount that consumers will buy because they purchase goods instead.


substitution effect the change in demand for a good when the relative price between a good and its substitute changes.

income effect the change in demand for a good when the income of the consumer change.

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