The Behavior of Consumers Spreading Increases in Income Earned in One

question 23

Multiple Choice

The behavior of consumers spreading increases in income earned in one period into increases in consumption over several periods is known as:

• A) random-walk consumption.
• B) transitory consumption.
• C) consumption smoothing.
• D) the income effect.

---

Definitions:

Constrained Resource

Refers to a limited factor that restricts a company's ability to produce goods or services, such as a machine with finite capacity or limited labor.

Profitable Use

The application or employment of an asset or resource in a manner that generates income or profit.

Craft Shows

Events where artisans and craftsmen display and sell their handmade goods.

Split-Off Point

The stage in the production process where joint products can be recognized as separate products.