Which of the Following Statements About the Income Effect of a Price

question 61

Multiple Choice

Which of the following statements about the income effect of a price change is NOT true?

• A) It affects consumption by removing compensation.
• B) It always involves a parallel shift in the budget line.
• C) It isolates the influence of a change in relative prices.
• D) It reflects the fact that a price change affects a consumer's purchasing power.

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Definitions:

Peaked

Describes a distribution that has a sharper or higher peak compared to a normal distribution.

Grouped Frequency Distribution

A method in statistics for organizing data into intervals or groups to display the frequencies of observations within each group.

Intervals

Segments between two points on the number line, often used to specify ranges of values for variables or data.

Equal Size

A condition or record in which groups or data sets have an identical number of elements.