The Income Effect of an Increase in the Price of Computers

question 81

Multiple Choice

The income effect of an increase in the price of computers may include all of the following except a decrease in

• A)the number of computers the consumer will purchase.
• B)other goods that the consumer will purchase.
• C)the consumer's actual, or nominal, budget.
• D)the consumer's real income.
• E)most goods that the consumer will purchase.

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Definitions:

Short Run

A timeframe in economics during which at least one factor of production is fixed, allowing only some variables to change in response to changes in demand or other influences.

Long Run

An economic interval where all production elements and expenses can fully adapt, as they are changeable, permitting comprehensive adjustments to any variations.

Short Run

A period in economic analysis where at least one production factor is fixed, limiting the ability of the economy or business to adjust immediately.

Long Run

A period of time in economics sufficient for all markets to adjust, including changes in production capacity and market entry or exit.