<p>The income and substitution effects just decomposes the price effect, i.e., the change in demand of a commodity due to a change in prices. What dermines the shape of the demand curves for a given commodity are preferences, and not the substitution and income effect. Whether or not a consumer increases the demand for a commodity as a consequence of an increase in his wealth (and this increase in demand is measured by the income effect) is just a matter of tastes of a consumer. If a commodity is perceived as a normal good, than a increase in wealth increases the demand for that commodity; if the commodity is perceived as an inferior good, an increase in wealth reduces the demand for that commodity.</p>

CC BY-SA 4.0
2023-02-07T08:52:02.343Z
2023-02-07T08:52:02.343Z
Tony
<p>No, the income and substitution effects are just decomposing the change in quantity due to a price change, given a demand curve. Thus the curve is not shifting/changing,  just like it does not shift/change when the price changes.</p>

CC BY-SA 4.0
2023-02-07T07:20:46.163Z
2023-02-07T07:20:46.163Z
Giskard
<p>As the question says, can either the income or substitution effect cause the demand curve to shift?</p>
<p>I understand that both income and substitution effects are key determinants of the shape of the demand curve for a good. But not sure if they can also cause the demand curve to shift.</p>

<microeconomics><income-effect>
Can the income and/or substitution shift the demand curve?
StatsScared
# Can the income and/or substitution shift the demand curve?

(Asked by: username_0 on 2023-02-07)

As the question says, can either the income or substitution effect cause the demand curve to shift?

I understand that both income and substitution effects are key determinants of the shape of the demand curve for a good. But not sure if they can also cause the demand curve to shift.

**Tags:** microeconomics, income-effect


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## 2 answers

### Answer by username_1 on 2023-02-07. Score: 2

The income and substitution effects just decomposes the price effect, i.e., the change in demand of a commodity due to a change in prices. What dermines the shape of the demand curves for a given commodity are preferences, and not the substitution and income effect. Whether or not a consumer increases the demand for a commodity as a consequence of an increase in his wealth (and this increase in demand is measured by the income effect) is just a matter of tastes of a consumer. If a commodity is perceived as a normal good, than a increase in wealth increases the demand for that commodity; if the commodity is perceived as an inferior good, an increase in wealth reduces the demand for that commodity.


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### Answer by username_2 on 2023-02-07. Score: 1

No, the income and substitution effects are just decomposing the change in quantity due to a price change, given a demand curve. Thus the curve is not shifting/changing, just like it does not shift/change when the price changes.


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