Real Income
n The increase in the price of dental services
has also reduced our real income - we can
now buy less than before with our money
income.
 The way which we react to this change in real
income depends on the kind of good or service.
Is dentistry a normal good ?(an increase in income
leads to an increase in demand and vice versa. So
a fall in real income will further reduce the amount
of treatment bought (income effect).