The book " built " on ordinal utility and mainstreamed the now-standard distinction between the substitution effect and the income effect for an individual in demand theory in the 2-good case.
32.
In general, however, since a luxury good has a high income elasticity of demand by definition, both the income effect and substitution effect will decrease demand sharply as the tax rises.
33.
Hercowitz is best known for the idea of investment specific technological change, formulating the zero-income effect utility function for labor, and introducing both capacity utilization and household production theory into macroeconomics.
34.
We have to know separately income effects of productivity change and production volume change or their combined income effect in order to understand which one result is better and how much better.
35.
If the consumer is a net saver, he will save more in the current period due to the substitution effect and consume more in the current period due to the income effect.
36.
We have to know separately income effects of productivity change and production volume change or their combined income effect in order to understand which one result is better and how much better.
37.
If the consumer is a net borrower, however, he will tend to consume less in the current period due to the substitution effect and income effect thereby reducing his overall current consumption.
38.
This result is expected for the value of public goods estimated with the contingent valuation method due to substitution and income effects ( Hoehn and Randall, 1989; Carson, Flores, and Hanemann, 1998 ).
39.
If somebody's lost his 401 ( k ) or is dealing with some capital loss, house money or not, if you compound that with an income effect, then I think you've got a problem.
40.
If the substitution effect is greater than the income effect, the labour supply curve ( in the adjacent diagram ) will slope upwards to the right, as it does at point E for example.
