stuff they dont really need like shoes and stuff
higher income, more luxery goods. not rocket science.
no, income effect on every good is not psitive because in case of giffen goods consumer will buy more if his income is low but he buy less at more income
An increase in income would change a person purchasing power. This would lead to an increase in demand for normal goods. Normal goods are goods that you would buy more of the greater your income is. An increase in population would also increase demand as there are now more people in the market to buy the goods.
A consumers income can affect their demand for most goods, for normal goods if the consumers income increases then there is a demand for more normal good, but a fall in income would cause a shift to the left for the demand curve, this shift is called a decrease in command. For inferior goods, an increase in income causes demand for these goods to fall, inferior goods are goods that you would buy in smaller quantities, or not at all, if your income were to rise and you could afford something better.
An example would be the car industry. When the income of consumers increases as a whole, the demand for cheap cars goes down and the demand for more expensive cars goes up. When that happens, cheap cars are considered inferior goods.
By producing the best quality of goods
Engel's Law of Consumption states that as income increases, the proportion of income spent on food and other necessities decreases, while the proportion spent on luxury goods and services increases. This law suggests that as people's income rises, their spending priorities shift from basic necessities to more discretionary items.
If a household has more income, they can now afford to buy more goods and services. Therefore, spending will increase and demand increases.
Increases in income allow for more disposable income which increases spending and the demand for goods. Decreases in income conversely decreases disposable income which decreases spending.
the income effect is the increase in real income you get from a drop in prices, the real income increases because you can buy more goods with the same amount of income. This is different from the substitution effect which shows this effect by you buying more of the good because it is relatively cheaper than another good, so you are substituting the expensive good in favor of the cheaper one.
the income effect is the increase in real income you get from a drop in prices, the real income increases because you can buy more goods with the same amount of income. This is different from the substitution effect which shows this effect by you buying more of the good because it is relatively cheaper than another good, so you are substituting the expensive good in favor of the cheaper one.
the income effect is the increase in real income you get from a drop in prices, the real income increases because you can buy more goods with the same amount of income. This is different from the substitution effect which shows this effect by you buying more of the good because it is relatively cheaper than another good, so you are substituting the expensive good in favor of the cheaper one.