Suppose an Individual Experiences a Permanent Increase in Income

question 48

Multiple Choice

Suppose an individual experiences a permanent increase in income. As a result of this increased income, further assume that the individual eats dinner at restaurants more frequently each month. This information suggests that dinners at restaurants for this individual are

• A) an inferior good.
• B) a substitute good.
• C) a normal good.
• D) both complimentary and inferior.

---

Definitions:

Accounting Entities

Organizations, businesses, or units for which separate financial statements are prepared, distinct from any other economic activities.

Generally Accepted Accounting Principles

A standard framework of guidelines for financial accounting that includes the details, complexities, and legalities of business and corporate accounting.

Audit

An evaluation, typically by an independent entity, to ensure that an organization's financial records and statements are accurate and in accordance with laws and regulations.

Financial Statements

Compiled documents that present an organization’s financial activity and condition, typically including the balance sheet, income statement, and statement of cash flows.