Siteadmin, Bureaucrats, Check users, nsAm_Govt_101RO, nsAm_Govt_101RW, nsAm_Govt_101_ta, nsJudgesRO, nsJudgesRW, nsJudges_talkRO, nsJudges_talkRW, nsTeam2RO, nsTeam2RW, nsTeam2_talkRO, nsTeam2_talkRW, oversight, Administrators
125,794
edits
Changes
Jump to navigation
Jump to search
Line 22:
Line 22: + +
Economics Homework Four - Model (view source)
Revision as of 19:35, October 11, 2009
, 19:35, October 11, 2009added one
:The income effect is the wealth that you gain or lose when the price of an item changes. For example, if hamburger is on sale for $.99 per pound vs $1.99 a pound, the effect is that I am gaining $1 and will purchase more hamburger as a result. (Shanna)
:The income effect is the wealth that you gain or lose when the price of an item changes. For example, if hamburger is on sale for $.99 per pound vs $1.99 a pound, the effect is that I am gaining $1 and will purchase more hamburger as a result. (Shanna)
:The income effect is an economic term used to describe the changes of price in a demand or service. When the price of a good decreases it allows the buyer to save more money or use that money to buy more of the good. (Amanda)
:The “substitution effect” starts off when the price a good increases. Since people do not want to pay the higher price, the substitute of the item starts to sell more due to its lower price. As a result the demand for the good with the higher price decrease as the demand for the lower priced substitute increases. (Leonard)
:The “substitution effect” starts off when the price a good increases. Since people do not want to pay the higher price, the substitute of the item starts to sell more due to its lower price. As a result the demand for the good with the higher price decrease as the demand for the lower priced substitute increases. (Leonard)