The Income Effect of an Increase in the Price of Peaches

question 237

Multiple Choice

The income effect of an increase in the price of peaches is

• A) the change in the quantity demanded of peaches that results from the price increase making peaches more expensive than other fruit, holding constant the effect of the price change on consumer purchasing power.
• B) the change in the demand for peaches as a result of the change in the price of peaches, holding all other factors constant.
• C) the change in the quantity demanded of other fruit that results from the impact of the price change on purchasing power, holding all other factors constant.
• D) the change in the quantity demanded of peaches that results from the effect of the change in price on consumer purchasing power, holding all other factors constant.

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Definitions:

Orally

Orally means communicated or expressed through spoken words rather than in written form or by any other means of communication.

Expressed Agency

An agency relationship clearly stated in oral or written terms.

Agency

A relationship between two parties in which one party, the agent, is authorized to act on behalf of another party, the principal, in business transactions.

Agreement

One of the four elements necessary for a contract; consists of an offer made by one party, the offeror, and the acceptance of the offer by another party, the offeree.