The Income Effect Measures How

question 19

Multiple Choice

The income effect measures how

• A)the quantity of a good supplied changes in response to a change in income
• B)the quantity of a good demanded changes in response to a change in the price of a good,with income constant
• C)far the budget line shifts due to a change in income
• D)the quantity of a good demanded changes in response to a change in purchasing power
• E)income changes when prices change,holding quantities demanded constant

---

Definitions:

Output

The quantity of goods or services produced by a firm or industry within a certain period.

Declines

Decreases in the value, amount, or quality of something.

Zero Slope

A horizontal line on a graph, indicating that there is no change in the y-value (vertical) regardless of the change in the x-value (horizontal); it represents a constant function.

Positive Slope

Indicates an upward trend on a graph, demonstrating that as one variable increases, the other variable also increases, especially used in the context of supply and demand curves in economics.