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5 Cards in this Set
- Front
- Back
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Substitution Effect
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consumers substitute away from the more expensive good.
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Income Effect
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As the price of a good increases, consumers' purchasing power falls--reducing income.
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Normal Good
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when income increases, you consume more of it
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Inferior Good
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when income increases you consume less of it. A good with a negative income efect is inferior.
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Giffen Good
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an inferior good where the income effect is larger than the substitution effect.
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