Suppose That the Incomes of Buyers in a Particular Market

question 244

Multiple Choice

Suppose that the incomes of buyers in a particular market for a normal good decrease and there is also an increase in input prices. What would we expect to occur in this market?

• A) The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous.
• B) The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.
• C) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
• D) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.

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Definitions:

Common Share

A type of security that represents ownership in a corporation, entitling the holder to vote at shareholders' meetings and to receive dividends.

Syndicate

A group of underwriters formed to reduce the risk and help to sell an issue.

Group of Underwriters

A team of financial institutions or individuals that jointly take on the risk of issuing new securities by purchasing them from the issuer and selling them to the public.

Reduce Risk

Strategies and measures employed by individuals or companies to minimize the exposure to financial loss or operational failures.