When the Price of a Good Increases, Ceteris Paribus, Consumers

question 121

Multiple Choice

When the price of a good increases, ceteris paribus, consumers perceive:

• A)an increase in wellbeing if the price increase occurs for an inferior good
• B)an increase in income if the price increase occurs for a normal good
• C)a loss in wellbeing since they can no longer purchase the same bundle that they had previously
• D)a net gain in income if they increase consumption of some goods

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Definitions:

Real GDP

Real Gross Domestic Product, accounting for the effects of inflation, calculating the total value of all goods and services generated by an economy in actual terms.

Stocks and Bonds

Are financial instruments where stocks represent ownership in a company and bonds are debt securities issued by entities to finance operations or projects.

Value Added

The increase in worth of a product or service as a result of a particular process.

Intermediate Product

An intermediate product is a product that might require further processing before it is ready for sale to the final consumer, often used as an input in the production of other goods.