Price Effect

In microeconomics and in particular in consumer theory, the price effect is the change that is registered in the optimum of the individual consumer derived from a variation in the price of one of the goods subject to the analysis, with all other conditions being maintained objective and subjective. The behavior of the individual consumer may be affected by this particular circumstance, since the price of one of the goods increases or decreases, but not his availability of income, his tastes and p .

Given the variation of the price of a product, the consumer must rework his plan of consumption, anticipating at all times to optimize his satisfaction; however, their situation as a consumer may improve (if the price of the good is reduced), moving to an indifference curve of a higher level of satisfaction; but it may worsen their situation, if the price increases, and must be transferred to an indifference curve of lower level of satisfaction. This change will involve a change in the consumption of each of the products that make up the subject basket. Bibliography

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