The Price of Cotton Rises

question 136

Multiple Choice

The price of cotton rises.What happens in the market for cotton shirts?

• A) The equilibrium price falls and the equilibrium quantity rises.
• B) The equilibrium price rises and the equilibrium quantity falls.
• C) The equilibrium price and quantity rise.
• D) The equilibrium price and quantity fall.

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Definitions:

Transfer Payments

Transfer payments are the distributions of money by the government to individuals without the requirement of goods or services in return, such as welfare or social security.

Income Redistribution

A policy or mechanism aimed at transferring income from certain individuals or groups to others, often to reduce economic inequalities.

Progressive

Describes policies or ideologies favoring social reform, innovation, and gradual improvements over time, often in the context of taxation, societal change, or politics.

Regressive

Refers to policies or measures that disproportionately affect those with lower incomes, often making them bear a larger relative burden.