A Change in the Distribution of Income That Leaves Total

question 31

Multiple Choice

A change in the distribution of income that leaves total income constant will not shift the market demand curve for a product providing:

• A)everyone has an income elasticity of demand of zero for the product.
• B)everyone has the same income elasticity of demand for the product.
• C)individuals have differing income elasticities for the product,but the average income elasticity for income gainers is equal to the average income elasticity for income losers.
• D)any of the above conditions occur.

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Definitions:

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume, such as rent or salaries.

Unit Product Cost

The total expense incurred to manufacture or produce one unit of a product, including direct materials, labor, and overhead costs.

Variable Manufacturing Overhead

These are costs that vary with production volume, such as utilities for the production plant or materials.

Net Operating Income

The total revenue from operations minus the operating expenses, exclusive of taxes and interest, in a different phrasing.