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The Income Effect of a Price Change Refers to the Change

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The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a substitute product.


Definitions:

Suggested Retail Price

The price that manufacturers recommend retailers to sell their products for to consumers.

Mark-Up

The markup on goods’ cost intended to defray overhead expenditures and yield profit.

Operating Expenses

The costs associated with the day-to-day operations of a business.

Operating Profit

Earnings derived from a corporation's principal operations, before subtracting interest and taxes.

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