The income effect also affects buying decisions when there are two

The income effect also affects buying decisions when there are two

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The income effect also affects buying decisions when there are two (or more) goods.  When the price of hamburgers goes up, it makes you feel relatively poorer, so your  tendency might be to buy fewer of both hamburgers  and  hot dogs.  If you look at the combined results of the income effect and the substitution effect, the  total effect is a little unclear. According to the income effect, an increase in the price of  hamburgers decreases consumption of both hamburgers and hot dogs. According to the  substitution effect, however, hamburger consumption drops, but hot dog consumption  rises.  Thus, while it is clear what happens to hamburger consumption, since both effects  tend to cause a decrease, we cannot be sure what happens to hot dog consumption,  since there is both an increase (substitution effect) and a decrease (income effect). 
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