17. For Jim the change in consumption of X due to the income effect is:

   We can isolate the change in demand due to the income effect by comparing the consumption bundle chosen on the new budget with the one that would be chosen if our consumer were faced with the compensated budget. We can see to the right that the amount of the change is 4 units. We also see that good X is an inferior good. Less is purchased on the higher compensated budget than on the lower new budget. As is always the case with inferior goods, the income and substitution effects work in opposite directions but because the substitution effect is much larger, total quantity demanded still falls when price rises.

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