When we derive the demand curve for a good, we should remember that the

a. substitution effect must be greater than the income effect.

b. income effect and the substitution effect may work in the same or in opposite directions?

Question

Brayden

Business

16 August, 01:06

When we derive the demand curve for a good, we should remember that the

a. substitution effect must be greater than the income effect.

b. income effect and the substitution effect may work in the same or in opposite directions?

+2

Answers (1)

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Valerie · Answer 1

(B) is the most correct answer. When deriving demand curves for goods, income and substitution effects can work in concert with each other or they can work in opposing directions. These effects can end up causing shifts in the curves that need to be understood to make sure that they are being adequately addressed in the overall curves of all related goods.

When we derive the demand curve for a good, we should remember that thea. substitution effect must be greater than the income effect.b. income effect and the substitution effect may work in the same or in opposite directions?

When we derive the demand curve for a good, we should remember that the

a. substitution effect must be greater than the income effect.

b. income effect and the substitution effect may work in the same or in opposite directions?