You Decide to Increase the Quantity of Pizza Purchased Each

question 151

Multiple Choice

You decide to increase the quantity of pizza purchased each month when the price decreases in part because the lower price causes an implicit increase in your income.This is an indication of the:

• A) output effect.
• B) income effect.
• C) substitution effect.
• D) distribution effect.

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Definitions:

Present Value Factor

A factor used to calculate the present value of a future amount of money or stream of cash flows given a specific rate of return.

Straight-Line Depreciation

A process of dividing the expense of a substantial asset into identical annual portions over its useful duration.

Net Income

The net income of a firm after deducting all expenses and taxes from its gross revenue.

Cash Payback Period

A rephrased term for Payback Period, this is the duration required for an investment to generate cash flows that cover its initial expense.