This Graph Depicts the Demand for a Normal Good

question 149

Multiple Choice

This graph depicts the demand for a normal good. A shift from A to B in the graph shown for a normal good might be caused by:

• A) an increase in price.
• B) a decrease in price.
• C) an increase in income.
• D) a decrease in income.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, decay, or decline in value.

Distribution

The payment of assets from a fund or account to its beneficiaries or shareholders, such as dividends or withdrawals.

Reduction in Basis

A decrease in the tax basis of an asset, which could result from deductions such as depreciation, or after receiving tax-free returns of capital.

Self-employment Income

Income earned from conducting a business or profession as a sole proprietor, independent contractor, or freelancer, subject to self-employment tax.