Volume 3, No. 1 (Spring 2000)
This note has shown that the possibility of the income effect of a price change is implied by the Misesian pure logic of choice. This note has not assumed that our individual must consume more than four loaves of bread to survive. No ad hoc assumption has been employed. Instead, the possibility of a backward bending labor supply has been logically derived from the subjective nature of value and the principle of diminishing marginal utility. Thus, it is clear that Salin’s views on the income effect of a price change are wrong. It is Rothbard who is correct and consistent with Misesian economics.
