When income effects are small,

Question

Quizplus · Accepted Answer

When income effects are small, the uncompensated demand curve is very close to the compensated demand curve. This is because the change in income has a minimal impact on the consumer's decision-making process, meaning that the change in price has almost the same effect on the consumer's demand regardless of whether or not they are compensated for the change in income. Therefore, the uncompensated demand curve lies close to the compensated demand curve.

When Income Effects Are Small