This income change can come from one of two sources: from external sources, or from income being freed up (or soaked up) by a decrease (or increase) in the price of a good that money is being spent on. The income effect in economics can be defined as the change in consumption resulting from a change in real income. ![]() ![]() ![]() In economics and particularly in consumer choice theory, the income-consumption curve (also called income expansion path and income offer curve) is a curve in a graph in which the quantities of two goods are plotted on the two axes the curve is the locus of points showing the consumption bundles chosen at each of various levels of income.
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