The Following Changes in a Consumer's Economic Circumstances Result in a Steeper

question 8

Essay

The following changes in a consumer's economic circumstances result in a steeper budget line with the vertical intercept unchanged.(Denote the good on the horizontal as good 1 and the good on the vertical as good 2.)
a.
A k percent decrease in the price of good 2 combined with a k percent decrease in income
b.
A k percent increase in the price of good 2 combined with a k percent decrease in income
c.
A k percent decrease in the price of good 2 combined with a k percent increase in income
d.
A k percent increase in the price of good 2 combined with a k percent increase in income.
e.
None of the above

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Definitions:

Bank Loan

A sum of money borrowed from a bank that must be repaid with interest over a predetermined period.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenue.

Revenues

The income generated from normal business operations, calculated by multiplying the price of goods or services by the quantity sold.

Dividends Payable

A liability account in a company's balance sheet indicating the amount in dividends that the company owes to its shareholders but has not yet paid out.