Example Income and Subsitution Effects For Normal and Inferior Goods

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Yet they ask that question

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My Uni dosen't even have the lectures for eco. They just gave us a book... Oh no... They told us what book to Buy.

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Facts

[@Wthieme1]

I understand income and substitution effects much better after watching your video. Its more informative and easy to follow than either my professor or my textbook. Thank you!

[@economicsfun]

+Will Thieme You are very welcome. Hopefully you will get a chance to share and like the videos. This will help others find them.

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[@arzunurpolat]

The good is a inferior good. What happens if the price of substitute goods increases? How do the demand shifts change? Can u please answer my question?

[@AK.]

This is the best explanation I have ever seen. Even my prof couldn't explain it this well

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Wow, your simple graphic of sliding the new budget line to be parallel to old indifference curve made way more sense to me than my professor drawing everything out on paper. Thanks for this awesome video!

[@sharissasterling3720]

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[@mikeblack9109]

this is more helpful than my lecturer

[@mmmnnn302]

Mike black really

[@realestateWithSusanYeh]

OMG this is by far the most simplist and logical way to explain the income and substitution effects! I been trying to understand how to do it with many videos and they could not explain it! I love this video!! Thank you sooooo much!!

[@hodlatodla5364]

Great video. For those that wish to go into some details: The intermediate baskets of goods in the video were all constructed with the Hicks method for finding "income-neutral" baskets. There is another method, the Slutsky method, were the intermediate basket of goods is built with a parallel line to the new budget line that we find (and here's the difference between the 2 methods) by stopping once the parallel line touches the original basket of goods. Our Slutsky budget line will be tangent to a new indifference curve at a point; this point is the Slutsky intermediate basket to be used for the Slutsky decomposition.

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[@economicsfun]

+ahccah Thanks, but you deserve all the credit. Good luck in your studies. Hopefully you can like and share the videos so other students can find them.

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Your video animation as well as explanation is world class! As a visual learner it really helped me a lot! Thank you for your effort in creating such in-depth tutorials! Cheers Subbed!

[@theuniverseeconomics]

Excellent video. I read the chapter from Micro Textbook and your video clarified things for me.

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All this while I was thinking that this was a difficult topic without even giving it a try..this video is so helpful! Thanks a ton!

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That is great to hear and good luck in your class too.

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eXCELLENT animations and tutorial, you deserve way more views

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+MegaNerevar Thanks! I am working my way up the view latter. Like and Share, it helps get the word out.

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Thank you. I don't have an econometrics channel but I do have a whole channel on statistics called statisticsfun. You should be able to see a link from this channel to my other channels.

[@RuominZHANG17]

Much more clear than my Econ class. Appreciate you for your work.

[@tvvt005]

Please do a video on slutlsky demand curve

[@deshanibandara9618]

Thank you very much. This was very helpful for my exams.

[@pkpk1309]

You are better than my professor.

[@MyDearKyoKun]

Really good explanation, thank you :) Also - you might consider being a therapist in your free time, your voice is so soothing lol xD

[@economicsfun]

You are very welcome! Make sure you like MyBookSucks on Facebook too (see link in video description). This will help others find the educational videos. Good luck in your classes to.

[@economicsfun]

Brianna, thanks for that. It is good to know that you think my videos are the best vides ever. If you have not already done so, Make sure you like MyBookSucks on FaceBook (see link in video description). This will help others find the educational videos.

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Very helpful. I appreciated the detail, graphics and the explanation as a whole. Thanks!

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Slow, but so effective, perfect pace. Thank you very much, it wasn't that clear when I read my book but it is now clear

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[@sakshamkatiyar5048]

With my textbook I use to sleep in these type of topics.....but here it is made so easy to grasp..... Thanks a lot...♥️from India

[@economicsfun]

The parallel shit in the budget line is due to an increase in income. The prices remain the same, so the slope of the line is the same too.

[@minnieyuusa]

How do u know where to place the indifference curve II on the new budget line?

[@deepakthapa9528]

even i have same problem. Confused where to put ic curve :(

[@RangeAhmed]

i think the way you have to look at it is you're answering a question. If the good is a normal good, then the income effect is positive and therefore the new indifference curve will have a to reflect the new (higher) quantity of the good that will be purchased. The same goes for decreases in price. For inferior goods, the income effect is negative and therefore the new indifference curve you draw must reflect the respective outcomes that occur when price rises/falls for an inferior good. So just look at what the question wants and from there draw your graphs! I hope this helped!

[@Naeemkhan-rv4kf]

for that u hv to read indifference curve properties, that it always convex to the origin

[@Explorer982]

I believe as long as you are within the boundaries of the original curve, which itself a subjective point. The curves can be drawn in different places, as long as they are tangent to the budget constraint line

[@Bugsyyyyyyy]

As far as I know, you always place it at the max satisfactory bundle/point which is where the slopes of both the budget line and the indifference curves are equal.

[@KermitDominicano]

I understand this way better now. Thank you! I wish my professors were this thorough

[@ED-iq3mv]

this 13 minutes video made me more understand than my 2 hours boring class thanks, this video is very helpful

[@ShaniCallingcard]

You solved all my thoughts about substitutional effect thank you so much

[@economicurtis]

Totally the best way to teach this tutorial!

[@rupertron]

Wow! You should be doing this full time! The video was superb, and the animations were spectacular- very lucid and self-explanatory. Kudos, and much thanks!

[@economicsfun]

Very good questions. The concept of the parallel line is to "simulate" a shift in income. If income changed how would the consumer change consumption. Make sense?

[@arshansoleymanianfar854]

Best and only video which thought me everything about Substitution and income effect that I clearly understand. Thanks

[@wjtan351]

how do you draw the parallel line, that is tangent to the 1st indifference curve? How do you find the points at which they are tangent? How do you find point C?

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best explanation so far

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Explained in an excellent way with correct use of graphics. Haven't seen such a neat explanation before. Thanks a ton! :) Keep making such videos ❤️

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i was stuck for quite some time but you made it clear. Thank you

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thank you soo much .. you made my day so easy ... what i was able to understand in one full day .. you did it in 13 min

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Thanks a lot, explained in a very clear way

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THE BEST EXPLANATION EVER!

[@Yukokaisian]

A very simple and easy to understand video, I know well about income&substitution effect after watching this. Thanks a lot!

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this is the best video on this topic!

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This video made it easier for me to understand. Thanks!

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This is amazing - so neat and easy to understand. Videos like these are perfect for visual learners, thank you!

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Yeah . 😍

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the pace and explanations are amazing. nice :)

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Really helped me in Khanna's Intermediate Micro class at Colgate. Thanks.

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Thank you so much...you are a life saver.

[@michellelal9625]

This is explained very well. Thank you!

[@LuisNanix17x]

Could you explain the theory of what happens when the price of good x goes up?

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Wonderful video.

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[@epiclegend3825]

I have a real question, for inferior good why is the IC2(indifference curve2) placed differently tangent to the Budget Line 2 compared to the normal good? It's somehow placed too much up along the budget line whereas for normal good it's placed on the middle

[@humayra_285]

simple and really easy to understand, love it !!!

[@economicsfun]

+Humayra _ Great to hear and thanks for letting me know my videos are helping you. Hopefully you can like and share the videos so other students can find them.

[@Chelsieenim]

You explained it very well!! Thanks❤

[@MrMenace3210]

Great vid. Could you explain how, for the increase in income on the inferior good, the quantity of X goes up? specifically, what is good X and what is good Y?

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Thank you very much for this video. The explanation was crystal clear.

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Yeah

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[@economicsfun]

You are very welcome!

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[@drmvnarasimhasarma]

Very useful to students.Great explanation

[@francrulex19]

Good but would be worth mentioning that you're showing the Hicksian substitution effect.

[@Black182heart]

Please do for giffen goods.

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Great one.very descriptive and simple thank you.

[@zoo9336]

this helped me so much. thank you!

[@jl8252]

Why do u shift the budget line parellel? How does that indicate same purchasing power? Thanks! Good video!

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Wonderful, really amazing explanation of confusing topic.

[@tonyzeng195]

Thank you very much! sir you save a lot students in college

[@economicsfun]

Yes I will. I am also adding more content. I have channels on Statistics too. Make sure you like MyBookSucks on Facebook (see link in video description). I post new material there as well and you can find links to all my channels.

[@jeffbates1538]

I'd only request that you work in the Hicks Demand Curve that ties into the I and S Effects. Otherwise, this helped a lot, thanks!

[@mohanbandaru06]

Consider two goods X and Y. Explain income effect and substitution effect of a rise in the price of good Y if: X and Y, both are inferior good X and Y, both are Giffen good X and Y are perfect substitutes X and Y are perfect compliments

[@user-ji2bi4yq8y]

very clearly explained, thx a lot

[@alanmartinezh]

Great work, thank you

[@brunelngoufack9976]

Hi. I think there is a mistake on your definition of inferior good. you said, "overall the price of X goes down but the quantity consume of X goes up". For an inferior good when the price goes down the quantity also goes down and when the price goes up the quantity consume equally follow the price and move up. This is the so-called Counter-intuitive Effect. You said that after 4:21 on your video. kind regards Brunel

[@dhanushamuthukumarana9475]

This really helps. Super stuff!