Other Things Equal, an Increase in a Consumer's Money Income

question 228

Multiple Choice

Other things equal, an increase in a consumer's money income

• A) increases the amount of utility a consumer receives from a given quantity of a good.
• B) shifts the individual's budget line rightward because she can now purchase more of both products.
• C) eliminates the individual's economizing problem.
• D) causes the consumer to choose a different combination of goods along a given budget line.

---

Definitions:

Variable Expense

Expenses that vary directly with changes in production volume or business activity levels.

Contribution Margin Ratio

A ratio that measures the proportion of sales revenue that exceeds variable costs, indicating how effectively a company can cover its fixed costs.

Target Profit

The desired net profit a company aims to achieve for a specific period.

Monthly Fixed Expense

Costs that do not vary in total regardless of production volume or sales levels, paid on a monthly basis.