This phenomenon can be visualized by plotting a budget line parallel to the original on indifference curves.
Hicksian demand can be recovered with the Slutsky equation if Marshallian demand and this phenomenon are both known. As wages increase, this phenomenon will start to predominate, causing the backward-bending labor supply curve. This phenomenon can be visualized by plotting a budget line parallel to the original on indifference curves. It is positive for (*) normal goods and negative for inferior ones. It is theoretically possible for this effect to predominate when a good's price drops, leading to less of that good being consumed. A Giffen good is a good where this is larger than the substitution effect. For 10 points, name this effect a change in a consumer's total real wealth has on behavior.
Hicksian demand can be recovered with the Slutsky equation if Marshallian demand and this phenomenon are both known.
{income effect} [or wealth effect until \"wealth\" is read]