The income effect causes quantity demanded to increase when the price of a normal good decreases, and causes quantity demanded to decrease when the price of an inferior good decreases.
What impact does income have on the quantity demanded?
The income effect explains how a rise in income can alter the amount of products demanded by consumers. As income goes up, so too does demand for so-called usual goods (and vice-versa). In microeconomics, this is reflected by the upward change in the downhill demand curve.
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