When the Price of a Pizza Decreases from $14 to $12

question 31

Multiple Choice

When the price of a pizza decreases from $14 to $12,

• A) the income effect points out that the total purchasing power of people who buy pizza increases.
• B) the income effect means that the demand for pizza will not change.
• C) the income effect means people buy less pizza.
• D) None of the above answers is correct.

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Definitions:

Settlement

The conclusion of a transaction or the resolution of a claim or dispute, usually involving the transfer of funds or assets.

Clean-Up Provision

A clause in a financial contract that requires the borrower to pay off a loan or line of credit in full after a specified period or under certain conditions, to ensure the credit line is periodically brought to a zero balance.

AASB 137

An Australian accounting standard that deals with the accounting for provisions, contingent liabilities, and contingent assets.

Long-Term Project

A project that spans over an extended time period, typically beyond one year, often involving substantial investment or complexity.