If the Price of a commodity falls, the Qty demanded rises more than the fall in the price.
Which Effect ? Income or Substitution or Both ?
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I think this will be substitution effect. Since price of the good has fallen, people who buy this good will buy more of it, and the people who buy its substitutes will now shift to buying this good, which is why the quantity demanded is more. Correct me if I’m wrong.
I think it is normal good and in normal good there is income as well as substitution effect and both are in same direction.
Eg. Px=10 Px1=5
Py=20 Qx=100
I = 2000
Now ,
20/10 = 2
But Px falls than Py price is more = 20/5=4
As customer now can purchase more of X it is substitution effect.
Income effect also in same direction because real power of money increases.
I think the answer should be Both as In case of a normal good Substitution effect as well as income effect is positive ( that is in the direction of the law of demand ). So with a fall in price of a commodity, that commodity will become relatively cheaper so we would sustitute other goods for this commodity and even from our income prespective our real income rises as we will be able to purchase more of this commodity.