Suppose That the Incomes of Buyers in a Particular Market

question 218

Multiple Choice

Suppose that the incomes of buyers in a particular market for a normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market?

• A) The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous.
• B) The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.
• C) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
• D) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

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Definitions:

Discount on Bonds Payable

The shortfall between a bond's listed face value and the price it achieves in the market when it ends up selling for less than that face value.

Face Amount

The face amount is the nominal or dollar value printed on a financial instrument like a bond or insurance policy, representing the amount due at maturity or the coverage amount.

Bond Redemption

A financial term referring to the process of repaying the principal amount of a bond at its maturity date.

Market Value

Market value refers to the price at which an asset would trade in a competitive auction setting.