The Income Effect of a Decrease in the Price of Potatoes,an

question 127

Multiple Choice

The income effect of a decrease in the price of potatoes,an inferior good,is a(n) :

• A)increase in the demand for onions.
• B)decrease in the quantity demanded of potatoes.
• C)increase in the demand for potatoes.
• D)increase in the quantity demanded of potatoes.
• E)decrease in the demand for onions.

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Definitions:

Annual Interest

The amount of interest paid or earned over a one-year period, typically expressed as a percentage of the principal.

Graduate

The act of completing a course of study at a college or university, culminating in the receipt of a degree.

Discount Rate

This is the interest rate utilized in discounted cash flow analysis to assess the current value of future anticipated cash flows.

Shareholders

Individuals or entities that own one or more shares of stock in a company.