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Income Effect

Published on Feb 05, 2016

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PRESENTATION OUTLINE

1.

INCOME EFFECT

BY ALEX SHUMWAY
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2.

DEFINITION

THE CHANGES IN CONSUMPTION OF NORMAL & INFERIOR GOODS CAUSED BY CHANGES IN INCOME
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3.

EXAMPLE

MY INCOME INCREASES, I BUY A NEW CHEVY AVALANCHE RATHER THAN A USED FORD RANGER
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4.

THE EFFECT

NOT IMPORTANT & HAS NO SIGNIFICANT EFFECT ON INDIVIDUAL CONSUMPTION
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5.

ALWAYS

AFFECTS BUYER POWER
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6.

QUANTITY=AMOUNT

THE CHANGE IN QUANTITY OF A GOOD
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7.

JOHN DOE WOULD

DESIRE MORE PRODUCTS, BECAUSE HE HAS GREATER DISPOSABLE INCOME.
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Alex Shumway