ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The income effect identifies the change in consumers’ demand for goods and services based on their incomes. In general, as one’s income rises, they will begin to demand more goods. Similarly, A decrease in income results in lower demand.

Detailed explanation-2: -The income effect is the change in the consumption of goods based on income. This means consumers will generally spend more if they experience an increase in income. They may spend less if their income drops.

Detailed explanation-3: -The income effect is a change in the demand for a good or service due to a change in a consumer’s purchasing power, which is, in turn, due to a change in their real income. It’s part of consumer choice economic theory that relates to how wealthy consumers feel.

Detailed explanation-4: -When income decreases, the demand for normal goods decreases. The relationship between income and inferior goods is an inverse one. When income rises, the demand for inferior goods decreases, whereas when income decreases, the demand for inferior goods increases.

Detailed explanation-5: -Consumers’ income is another factor affecting demand. This figure represents how much money a consumer has available for purchasing products and services. If the consumer’s income increases, their purchasing power also improves, meaning that demand for a product or service goes up.