Questions tagged [income-effect]

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How is Elon Musk's free Tesla charge a sustainable business model?

I came across this video, where Elon says charging a Tesla car at Tesla supercharge station is free and will be free always How is this a sustainable business model? Where will the money for ...
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Is Hicksian always steeper than Marshallian?

The compensated demand curve eliminates income effects. It reflects only substitution effects. Given that the Marshallian demand curve reflects income effects, doesn't this mean it is always more ...
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Calculate income and sustitution effect from utility funcion

Utility function $U(x_1 , x_2) = x_1 + 4 * x_2 $ $ p_1 = 3, p_2 = 8, m =120 $ $p_2$ changes from $8$ to $10 $ How can I calculate the income and substitution effect. I first thought about calculating ...
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How to calculate substitution and income effect when only 1 bundle is given?

I was given information of a consumer that initially consumed 4 units of both good x and good y with the initial price of $5 for both goods (px = py = 5). The initial budget constraint is 40 = 5x +5y ...
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How should I regress income inequality on economic growth?

I would like to know which variables to use to regress income inequality on economic growth. For income inequality, I am thinking of using the Gini index, but don't know what measurement exactly. For ...
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Meaning of «intertemporal substitution effect dominates the income effect»

Assume a household intertemporal optimisation problem, where they only either consume or labour, and one of the equilibrium conditions states that labour will be a positive function of productivity, ...
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