The Income Effect of a Price Change Is the Effect

question 1

Multiple Choice

The income effect of a price change is the effect on consumption changes as a result of a change in:

• A) income when all prices change in the same proportion.
• B) purchasing power caused by a change in the price of the good.
• C) income caused by a change in the price of labour.
• D) income sufficient to offset the effect of a price change.

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Definitions:

Behavioural Component

Refers to the actions or reactions of an individual in response to external or internal stimuli.

Achievement Motivation

The drive or desire to accomplish goals, excel, and attain success as defined by the individual or society.

Immediate Gratification

The desire to experience pleasure or fulfillment without delay or deferment, often prioritizing short-term rewards over long-term outcomes.

Competitive Occupations

Jobs or careers where individuals or organizations compete against others for resources, recognition, or achievement.