Suppose There Is an Increase in Income in the Community

question 10

Multiple Choice

Suppose there is an increase in income in the community. If bagels are a normal good, this will cause:

• A) an increase in the equilibrium price and a decrease in the equilibrium quantity of bagels exchanged.
• B) an increase in both the equilibrium price and quantity of bagels exchanged.
• C) a decrease in the equilibrium price and an increase in the equilibrium quantity of bagels exchanged.
• D) a decrease in both the equilibrium price and quantity of bagels exchanged.

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Definitions:

Standard Deviation

A statistic that measures the dispersion or variability of a dataset relative to its mean, often used in finance to gauge investment risk.

Risky Asset

An investment that holds a significant chance of losing some or all of its value, offering the potential for higher returns to compensate for higher risk.

Risk-Averse

A characteristic of investors who prefer lower risk investments, opting for certainty and stability in their investment choices.

Variance

A measure of the dispersion of a set of data points around their mean value, representing the average of the squared differences from the mean.