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Negative income effect is stronger than positive substitution effect. Explain?
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Negative income effect is stronger than positive substitution effect. ...
Since the substitution effect is always negative, this means that goods are either normal or that, for inferior goods, the substitution effect is stronger than the income effect. Very rarely, it may be the case that there is a positive relationship between price and demand.
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Negative income effect is stronger than positive substitution effect. Explain?
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