The Income Effect of a Price Change Is Described by Which

question 86

Multiple Choice

The income effect of a price change is described by which of the following statements?

• A) When the price of a good falls, consumers have an implicit increase in income and can now buy more of the good.
• B) When the price of a good falls, consumers will now substitute this lower priced good for more higher priced goods.
• C) The income effect is the relative change in the amount of a good consumed when the price of another good changes.
• D) The income effect shows how a change in income at a given price will affect the quantity of a good purchased.

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Definitions:

Single-Price Retailer

A single-price retailer is a retail business model where all items in the store are sold at the same price point, simplifying the shopping experience for consumers.

Warehouse Club

A retail store, usually requiring membership, that sells a wide variety of goods in bulk at discounted prices.

Hypermarket

A large retail space combining a supermarket and a department store, offering a wide range of products under one roof.

Supercenter

A large retail establishment that combines a supermarket with a department store, offering a wide range of goods and services under one roof.