In the case of normal and low grade products, what is the relationship between the income effect and

According to the commodity substitution effect.

In relation to income utility, products can be divided into normal products, inferior products and Kefen products. Normal goods, in turn, include luxury goods and necessities.

It feels like housing and food are all necessities, and opera tickets are luxuries. will lead to an income effect.

declines, the substitution effect declines. Salt is a low-grade product, which will lead to an increase in the income effect and a decrease in the substitution effect.

Explanation: If commodity X is a normal good, when ** rises, both the substitution effect and the income effect change inversely with **, and its total effect is negative, that is, ** rises, and demand decreases. It shows that the slope of the demand curve of normal products is negative, and ** changes in the opposite direction with the demand quantity.

If commodity X is inferior, the income effect changes in the same direction as **, and the substitution effect changes in the opposite direction with **, that is, the substitution effect is negative and the income effect is positive, and the positive or negative total effect depends on the relative strength of the two effects.

If the substitution effect is stronger than the income effect, then the total effect of change on demand is negative, i.e., it rises and demand falls.

If item x is a Giffen item.

The income effect changes in the same direction as **, the substitution effect changes in the opposite direction, the substitution effect is negative, the income effect is positive, the income effect is greater than the substitution effect, and the total effect is positive, that is, the ** rises, and the demand rises.

In the case of normal goods, ** falls, income rises, and demand also rises, so the income effect and ** change are in the opposite direction.

In the case of low-grade products, ** declines, income rises, but demand declines, so the income effect is in the same direction as ** when it changes.

The substitution effect of low-grade products.

The effect is greater than the income effect.

effect, because its substitution effect is a side, the substitution effect is less than the income effect, and it should be normal and low-grade products.

No, this should be a Giffen commodity.

No, the income of low-grade products has a great impact on consumers, and its income effect is greater than the substitution effect. The product should be normal or Giffen.

This is the case with both normal and low-grade products, not necessarily low-grade products.

Wrong, I don't know why, I don't know the answer, I also want to know why....

A change in the demand for a commodity** will cause a change in the demand for the commodity, which can be decomposed into two parts: the substitution effect and the income effect. When the ** of a commodity changes, it will have two effects on consumers: one is to change the actual income level of consumers.

The second is to make the relative change of the commodity.

The substitution effect is always negative, and the income effect can be positive or negative.

This is a Mankiw microeconomics problem, where people's incomes increase, low-grade items equalize** and quantity decreases.

Low-grade items are goods whose demand changes in the opposite direction to income. For low-grade items, the income effect changes in the same direction as **, and the substitution effect changes in the opposite direction with **, and, in most cases, the substitution effect is greater than the income effect, so the total utility changes in the opposite direction with **.

Regardless of whether a commodity is a normal commodity or an inferior product, it will not affect the income effect of the change in the commodity**.

The situation of inferior products is different from that of normal products. Since the income elasticity of the demand for inferior products is less than zero, the income effect of inferior products is that the demand and the actual income change in the opposite direction, that is, the actual income increases and the demand decreases. Real income decreases and demand increases. If a commodity is inferior, the income effect and the substitution effect will work in opposite directions after its ** change.

As a result, the income effect weakens the substitution effect. The income effect and substitution effect of inferior products, the total effect is Q2 Q0; The substitution effect is q1 q0; The income effect should be equal to the total effect minus the substitution effect, that is, the income effect = (q2 q0) q1 q0) = q2 q1 Although the income effect and the substitution effect work in the opposite direction, since the substitution effect is greater than the income effect in absolute value, the overall result of the decline is that the demand for the commodity increases. **The consumption line is still sloping to the right.

The resulting demand curve is also sloping to the lower right. Therefore, even if it is an inferior product, it generally follows the law of demand, but the elasticity of the demand curve is relatively small.