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dillon_green23 dillon_green23
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4 years ago
The demand curve for canned peas is downward sloping. If the price of canned peas, an inferior good, rises, then

▸

the income and substitution effects offset each other but the price effect of an inferior good leads you to buy more canned peas.



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the income effect which causes you to reduce your canned peas purchases is smaller than the substitution effect which causes you to increase your purchases, resulting in a net increase in quantity demanded.



▸

both the income and substitution effects reinforce each other to decrease the quantity demanded.



▸

the income effect which causes you to increase your canned peas purchases is smaller than the substitution effect which causes you to reduce your purchases, resulting in a net decrease in quantity demanded.

Textbook 
InMicro

InMicro


Edition: 1st
Authors:
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osvaldoguzmanosvaldoguzman
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