An Increase in Income Will Cause the Budget Constraint to Shift

question 7

True/False

An increase in income will cause the budget constraint to shift outward and will allow the consumer to be able to choose between two possible optimum choices.

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Definitions:

Irrelevant Costs

Costs that will not be affected by a decision and should not be considered when making that decision.

Periodic Basis

A method of accounting where financial and inventory records are updated at regular, fixed intervals.

Resale Value

The expected price at which an asset can be sold in the market after it has been used.

Incremental Costs

The additional costs incurred when a company increases production by one unit.