For Normal Goods Like Cola and Pizza,what Is a Likely

question 175

Multiple Choice

For normal goods like cola and pizza,what is a likely result of the income effect when the price of pizza falls

• A)The consumer feels richer, so he buys more cola.
• B)The consumer feels richer, so he buys less cola.
• C)Cola becomes relatively more expensive, so the consumer buys more cola.
• D)Cola becomes relatively less expensive, so the consumer buys less cola.

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Definitions:

Federal Income Tax

A tax levied by the federal government on individuals' and businesses' annual earnings, used to fund public services and government obligations.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the taxation rate for each additional dollar earned.

Federal Income Tax

A tax levied by the U.S. federal government on an individual's or entity's annual income.

Marginal Tax Rate

The rate at which an additional dollar of income would be taxed, representing the tax rate applicable to the highest dollar of an individual's income.