The Income Effect Is

question 36

Multiple Choice

The income effect is:

• A)the change in utility caused by a price change
• B)represented by a parallel shift of the budget constraint
• C)the result of a change in nominal income
• D)the change in real income caused by a price change

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Definitions:

Absolute Advantage

The ability of an entity to produce a good or offer a service more efficiently than its competitors when using the same amount of resources.

Absolute Advantage

The capability of an individual, company, or country to produce a good or service at a lower cost per unit than competitors.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than another entity, leading to more efficient trade and production.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than others.