Marginal Utility Theory Predicts That If a Consumer's Income Decreases

question 122

Multiple Choice

Marginal utility theory predicts that if a consumer's income decreases, the consumer

• A) buys fewer normal goods.
• B) buys fewer inferior goods.
• C) buys more of all goods.
• D) might either increase or decrease purchases of normal goods.

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, often expressed annually.

Period of Time

A Period of Time is a specific duration measured in terms of days, weeks, months, or years, during which certain activities or events occur or are intended to occur.

Discount Factors

A multiplicative factor used to discount future cash flows back to their present value.

Present Value

The present-day assessment of a future sum of money or cash flow series, after considering a specified rate of return.