To What Does the Income Effect of a Price Change

question 218

Multiple Choice

To what does the income effect of a price change refer?

• A)The change in demand that occurs when consumer income changes.
• B)The change in the quantity demanded that results from a change in price, making the good more or less expensive relative to other goods, holding everything else constant.
• C)The change in demand that occurs when both income and price change.
• D)The change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant.

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Definitions:

Arrow Impossibility Theorem

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The study of collective decision processes and voting systems, analyzing how individual preferences are aggregated to reach a collective decision or social welfare outcome.

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Retirement savings plans sponsored by employers, allowing employees to invest a portion of their paycheck before taxes are taken out.

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The range of options available to employees regarding job selection, work hours, and career paths.