According to the Income Effect, an Increase in the Price

question 102

Multiple Choice

According to the income effect, an increase in the price of oranges will:

• A)​cause consumers to consume more apples because of greater savings on that good.
• B)​cause consumers to spend more on oranges because a higher price signals that oranges are better than apples.
• C)​cause consumers to replace some oranges with other fruit that is now relatively cheaper than oranges.
• D)​leave consumers with less real income to spend on all goods.

---

Definitions:

Marketable Securities

Financial instruments that can be easily converted into cash, such as stocks, bonds, or treasury bills, typically held for short-term investment purposes.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a particular period, indicating the efficiency of inventory management.

Days' Sales

A financial metric estimating the number of days required to convert a company's inventory into sales, also known as inventory turnover period.

Cost Of Goods Sold

The expenses directly associated with manufacturing products that a company sells.