Suppose That the Incomes of Buyers in a Particular Market

question 244

Multiple Choice

Suppose that the incomes of buyers in a particular market for a normal good decrease and there is also an increase in input prices. What would we expect to occur in this market?

• A) The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous.
• B) The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.
• C) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
• D) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.

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Definitions:

Progressive Tax

A taxation system where the tax rate increases as the taxable amount or income of the individual or entity increases.

Benefits-Received Principle

A taxation theory stating that individuals should pay taxes in proportion to the benefits they receive from government services.

Gasoline Tax

A levy imposed by governments on the sale of gasoline, often used to fund transportation infrastructure and environmental initiatives.

Corporate Income Tax

A tax on the profit of a corporation, where the tax rates can vary based on a country's tax laws and the company's income levels.