Respuesta :
When the price is above marginal cost, selling one more unit at the current price will increase profit. This concept is known as the Income effect.
What do you mean by Income effect?
The income effect can be defined as the change in demand for a good or service caused by an increase or decrease in a consumer's purchasing power or real income. As Income grows, according to income, people will start to demand more.
Example : a consumer may choose to spend less on any leisure activity, because his income dropped.
The income effects helps in depicting consumer choice theory, the demands in the market and the other economic factors.
Hence, When the price is above marginal cost, selling one more unit at the current price will increase profit. This concept is known as the Income effect.
To know more about Income effect from the given link
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