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What is the substitution effect?
As demand rises, people will substitute other products.
The law of demand results from which two patterns of behavior?
substitution effect and income effect :) 100% accurate
The individual demand curve is downward slopping use income and substitution effect to explain?
help me with the answer
Assuming increase a price of commodity X where x is an inferior good decompose the total effect of price change into substitution n income effect also derive the demand curve?
decompose total effect of price increase for an inferior good and giffen into substitution and income effect, in each case derive both the ordinary and compensated demand curve
Can factors that effect demand also affect supply?
no
Price effect is a combination of income effect and substitution effect?
Yes, Price effect = substitution effect + income effect
What is the cross elasticity of demand if two commodities are substitute and if two commodites are complement of each other?
cross effect is positive in substitution effect and negative in complementry goods
What is the Difference between income effect and substitution effect?
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.
How did supply and demmand effect the price of cattle?
Hoe did supply and demand affect the price of cattle
What does the substitution effect do when the price drops?
facts
Demand curve of a giffen good?
A Giffen good is a good whose consumption increases as its price increases. (For a normal good, as the price increases, consumption decreases.) Thus, the demand curve will be upward instead of downward sloping.A giffen good has an upward sloping demand curve because it is exceptionally inferior. It has a strong negative income elasticity of demand such that when a price changes the income effect outweighs the substitution effect and this leads to perverse demand curve.
What factors affect elastic of demand?
There are plenty of factors affecting elasticity of demand including climate of the area. Other factors that effect elasticity of demand include supply and group of people buying.
