What is income effect?
Dear student,
Income effect analyses the impact of change in the income of the consumer on the quantity demanded of a good. For normal goods income effect is positive. That is, with a rise in the income of the consumer the demand for the good increases and vice-versa.
Income effect analyses the impact of change in the income of the consumer on the quantity demanded of a good. For normal goods income effect is positive. That is, with a rise in the income of the consumer the demand for the good increases and vice-versa.