The Income Effect of an Increase in the Price of Salmon

question 244

Multiple Choice

The income effect of an increase in the price of salmon

• A)is the change in the demand for salmon when income increases.
• B)refers to the relative price effect-salmon is more expensive compared to other types of fish-which causes the consumer to buy less salmon.
• C)refers to the effect on a consumer's purchasing power which causes the consumer to buy less salmon, holding all other factors constant.
• D)is the change in the demand for other types of fish, say trout, that results from a decrease in purchasing power.

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Definitions:

Credited

Recorded or acknowledged as having received something, often used in financial contexts to indicate an addition to certain accounts.

Selling Price

The price at which a product or service is sold to customers.

Retained Earnings

The portion of a company's profits that is not distributed as dividends to shareholders but is instead reinvested in the business or kept as a reserve.

Cash Available

The amount of cash that a company or an individual has on hand or can easily access.