When Consumption and Leisure Are Both Normal Goods,an Increase in Real

question 19

Multiple Choice

When consumption and leisure are both normal goods,an increase in real dividend income minus taxation,the rational consumer

• A) increases consumption and increases leisure.
• B) increases consumption and reduces leisure.
• C) reduces consumption and increases leisure.
• D) reduces consumption and reduces leisure..
• E) increases consumption and increases work.

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Definitions:

Fixed Costs

Costs that do not change with the level of goods or services produced in the short term.

Short Run

A period in economics where at least one factor of production is fixed, limiting the firm's ability to adjust to changes in market demand.

Variable Costing

An accounting method where variable costs are charged to cost units and fixed costs are treated as period costs.

Cost Behavior

Refers to the way different types of production costs change when there is a change in the level of production.