Assume the Price of Good X Increases

question 135

Multiple Choice

Assume the price of good X increases. As a result, your real income decreases and you decrease the quantity of good X purchased each month. This is an example of the:

• A) income effect.
• B) consumer price effect.
• C) revenue effect.
• D) substitution effect.
• E) all of these.

---

Definitions:

Investment

The allocation of capital to purchase assets or securities with the expectation of generating future profits or income.

Slope

A measure of the steepness or inclination of a line, calculated as the ratio of the vertical change to the horizontal change between two points on the line.

Vertical Axis

In graphing, the y-axis that typically represents the variable being measured or dependent variables.

Marginal Changes

Small, incremental adjustments to an existing plan of action, often considered in decision making and economic analysis.