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Price Effect

Substitution Effect: Meaning, Impacts, Types of Goods

January 21, 2025 · Ahmad Nasrudin

The substitution effect is a change in consumption patterns due to changes in the relative prices of goods and services. Consumers replace more expensive products with cheaper ones. So, if the price of a product rises, consumers switch and increase

Income Effect: Meaning, Implications

August 18, 2024 · Ahmad Nasrudin

The income effect measures the impact of changes in purchasing power on demand. It can be positive or negative.We measure the purchasing power of consumers from real income, namely nominal income, after adjusting for the price of the goods. It is

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