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For inferior commodities income effect is

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Economics
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For inferior commodities, income effect is

Answer & Solution
Correct Answer: Option B
For inferior commodities, income effect is Negative. When price of an inferior good falls, its negative income effect will tend to reduce the quantity purchased, while the substitution effect will tend to increase the quantity purchased.
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Lakshay Tanwar
Lakshay Tanwar 5 years ago
Substitution effect dominates income effect of inferior good, that's why price effect is negative in inferior good, thus income effect is positive
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