When the price of an inferior good falls, the substitution effect contributes to _____ in the quantity demanded, and the income effect _____ the substitution effect?
Added by Stephen F.
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This is because consumers will switch from purchasing more expensive goods to the now cheaper inferior good. The income effect, on the other hand, can either reinforce or counteract the substitution effect. If the inferior good is considered a normal good for the Show more…
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