Discuss the Importance of the Intervention Wheel

question 2

Essay

Discuss the importance of the Intervention Wheel

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Definitions:

Marginal Utility

The additional satisfaction or value a consumer gains from consuming one more unit of a good or service.

Economic Good

A product or service that has value and can be sold in a market because it is scarce in relation to demand.

Substitution Effect

That part of an increase (decrease) in amount consumed that is the result of a good being cheaper (more expensive) in relation to other goods because of a reduction (increase) in price.

Income Effect

The change in consumption resulting from a change in real income, typically due to a price change of goods or services.