Microeconomics 2 - Microeconomics II Chapter 6 Consumer...

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Microeconomics II Chapter 6: Consumer Behavior How do consumers make decisions? Where does the demand curve come from? 2. Consumers want to spend each dollar on a commodity that give the highest marginal utility per dollar.
The income effect: The Income effect creates a change in quantity consumed because the change to price effects the real income of the consumer. a) For Normal Goods: If the price decreases, then quantity increases and vice versa. b) For Inferior Goods: If the price decreases, then the quantity decreases also and vice versa.

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