The income effect explains why there is an inverse relationship between the price of a normal good and the quantity of the good demanded.

Question

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The income effect refers to the change in the quantity demanded of a good or service that results from a change in the consumer's purchasing power due to a change in their income. A higher price for a good would mean that the consumer can afford to purchase less of it, and vice versa. Therefore, there is an inverse relationship between the price of a normal good and the quantity of the good demanded.

The Income Effect Explains Why There Is an Inverse Relationship