When the Price of One Good Increases,the Associated Income Effect

question 39

Multiple Choice

When the price of one good increases,the associated income effect is represented by a move from one indifference curve to a:

• A) lower indifference curve since real income is now higher.
• B) lower indifference curve since real income is now lower.
• C) higher indifference curve since real income is now higher.
• D) higher indifference curve since real income is now lower.

---

Definitions:

Cost Method

An accounting method used for investments, where the investment is recorded at cost and adjustments are made only for dividends received and permanent declines in value.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders, often used for reinvestment in the business or to pay down debt.

Equity Method

An accounting approach for recording investments in other entities, where the investment's value is adjusted based on the investor's share of the investee's profits or losses.

Dividends

Payments made by a corporation to its shareholder members, distributed from the company's profits.