| 1. | The income effect is a phenomenon observed through changes in purchasing power.
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| 2. | This ruled out income effects as an explanation for the endowment effect.
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| 3. | This explains the negative income effect on consumption.
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| 4. | Thrall introduces a consumption theory of land rent that includes income effects; utility is broadly considered.
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| 5. | The substitution effect is reinforced through the income effect of lower real income ( Beattie-LaFrance ).
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| 6. | This means demand for these goods is perfectly inelastic; the income effect equals the substitution effect.
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| 7. | In addition, purchasing power from the price decline increases ability to buy ( the income effect ).
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| 8. | Any good where the income effect more than compensates for the substitution effect is a Giffen good.
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| 9. | Then the income effect from the rise in purchasing power from a price fall reinforces the substitution effect.
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| 10. | The pure income effect is shown as the movement from point A to point C in the next diagram.
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