Suppose the Incomes of Buyers in a Market for a Particular

question 89

Multiple Choice

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

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

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Definitions:

Effective-interest

Another term for the effective interest method, emphasizing the allocation of interest over the life of financial instruments like bonds.

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, paid as interest on debt such as loans, bonds, or lines of credit.

Convertible Bonds

Bonds that may be converted to other securities of the issuer (usually common stock).

Bondholder

An individual or entity that owns a bond issued by a borrower, entitling them to receive interest payments and the return of principal.