If Your Nominal Income Remains Constant at $3,000 While the Price

question 99

Multiple Choice

If your nominal income remains constant at $3,000 while the price of an important product in your budget,such as cell phone service,rises from $50 to $100,your real income has

• A)Decreased by $50.
• B)Decreased by $100.
• C)Decreased by $150.
• D)Remained constant.

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Definitions:

Purely Competitive Market

An economic setup marked by the presence of numerous small-sized companies, identical products, and straightforward market entry and exit, culminating in firms accepting prevailing market prices.

Cost Data

Information related to the expenses incurred in the production of goods or services, including materials, labor, and overhead costs.

Purely Competitive Producer

A firm operating in a market where there are many sellers and buyers, the product is homogeneous, and there are no barriers to entering or exiting the market.

Shutting Down

The temporary or permanent cessation of operations, particularly referring to a firm's decision when it cannot cover its variable costs.