Assume That a Consumer Purchases Only Two Products

question 245

Multiple Choice

Assume that a consumer purchases only two products. Suppose that the consumer's money income doubles, and the prices of the two products also double. These changes in income and prices will result in

• A) a shift of the budget line inward to the left.
• B) a shift of the budget line outward to the right.
• C) no change in the budget line.
• D) an increase in the slope of the budget line.

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset, dividing the difference between its cost and salvage value evenly over its useful life.

Capital Budgeting

involves the evaluation and selection of long-term investments that are in line with the goal of maximizing the value of a firm.

Incremental Sales

The additional sales generated by a particular business action or decision, reflecting the net increase in sales due to that specific activity.

Operating Expenses

Expenses that relate to the day-to-day operations of a business, excluding costs associated with the production of goods.