What is the "income effect" and how does it relate to changes in the price of burgers?
The income effect is the effect on consumer's behavior due to changes in their real income and price of goods. If the price of burgers (an inferior good) increases, it would increase demand. If burgers are a normal good, demand decreases with price increase. If no substitutes exist, price increases only affects consumer's spending, not the quantity demanded.
Understanding the Income Effect
The income effect refers to the effect on consumer behavior, pertaining to their real income and the changes in price level of a good. If we consider the price of burgers, in three circumstances we can understand the income effect. If burgers are considered as an inferior good, an increase in their price will make consumers feel wealthier, compelling them to purchase more. This happens because for inferior goods, as the income of consumers increase, the demand decreases.
If burgers are viewed as normal goods, a rise in prices would lead consumers to feel poorer and hence, they will buy fewer burgers. Normal goods are those goods for which demand increases with an increase in income. Lastly, if there are no close substitutes for burgers, then an increase in their prices will only affect the spending habits of consumers, but won't affect their quantity demanded.
This could happen in case of a monopoly market where the supplier has complete control over the prices and the demand is inelastic, meaning it doesn't change much with changes in price.