The document is an economics presentation about price effect. It defines price effect as the change in demand in response to a change in price of a commodity, with other factors held constant. Price effect is the sum of the substitution effect and income effect. The substitution effect occurs when consumers substitute cheaper goods for more expensive goods to maximize satisfaction at a fixed income level. The income effect depends on whether a good is normal, inferior, or a Giffen good, and how changes in real income from price changes affect demand for that good.

1. ECONOMICS PRESENTATION TOPIC- PRICE EFFECT PRESENTED BY: PRAVEEN KUMARROLL-882041 BBALLB(3RD SEM)

2. PRICE EFFECT It is the change in demand, in response to a change in price of a commodity, other things remaining constant. Other Things: Income of the consumer, Tastes and Preference of the consumer, Price of other goods. All these are treated to be constant.

3. Proportionate change in Quantity demanded of x Proportionate change in Price of x Price Effect =

5. Income Effect.PRICE EFFECT = INCOME EFFECT + SUBSTITUTION EFFECT

8. INFERIOR GOODS : Due to an increase in real income demand decreases.