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| Topic: |
Business
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| Number of pages / Number of words: |
3 / 749 |
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A decrease in the price of Tango will shift the demand curve leftward for Fanta, as there is a decrease in demand.
The consumer can move to higher indifference curve as they can now buy more Tango with the same amount of income as before.
Explain carefully the difference between the income and substitution effects of a fall in price of a good...
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How will the size of those effects differ between normal and an inferior good?
The income effect is part of response in the demand for a good to change in its price, which is due to a rise in the real income of consumers resulting from a price decrease. Effect is normally positive enless with inferior good where it is negative...
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