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The Percentage Change in Quantity Demanded of One Good or Service

question 33

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The percentage change in quantity demanded of one good or service divided by the percentage change in the price of a related good or service is:


Definitions:

Income Effect

The change in an individual's consumption resulting from a change in their real income, affecting their purchasing power.

Normal Good

A type of good for which demand increases as the income of individuals or the economy grows.

Substitution Effect

The substitution effect occurs when consumers replace more expensive items with less costly alternatives.

Income Effect

A change in the quantity demanded of a good or service as a result of a change in real income (purchasing power).

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