Suppose Income Increases. Choose the Correct Statement

question 146

Multiple Choice

Suppose income increases. Choose the correct statement.

• A)The equilibrium price of turnips falls if a turnip is an inferior good.
• B)The equilibrium price of turnips rises if a turnip is an inferior good.
• C)The equilibrium quantity of turnips decreases if a turnip is an inferior good.
• D)The supply of turnips decreases whether or not a turnip is an inferior good.
• E)Both A and C

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Definitions:

Disutility

The dissatisfaction or unhappiness experienced by a consumer due to the consumption of a good or service, or from engaging in an activity.

Fine

A monetary penalty imposed by an authority on individuals or organizations for violations of legal rules.

Endowment Effect

The phenomenon where individuals value an owned item more than a similar item they do not own.

Gains

An increase in wealth, utility, or value resulting from an economic transaction or activity.