When Income increases, how are the following measures affected? (assume the following are in time order)

Choices are either A-Increase (right) B- Decrease (left) C- No effect D- unknown Measures being affected... A, B, C, OR D

1. The HH Budget (line)

2. HH Consumption

3. Output demand shifts

4. Economic (consumer) Welfare

5. Firm Revenue

6. Firm profits (assume proportionate costs)

7.Output Supply shifts

8.Output market price (after supply shift only)

9.Factor demand shifts (from output supply shift, before the preceding output market price re-eq)

10.Wages (income) - from factor demand shift only

11.Factor supply shifts (assuming labor leisure is dominated by the substitution not income effect)

12.Leisure (assuming labor leisure is dominated by the substitution not income effect)

13.Economic (consumer) Welfare (after FULL S/D re-equilibration, all effects applies)

Answer rating: 100% (QA)

1 The HH Budget line ANSWER A Increase EXPLANATION Generally when income increases the budget line will shift outwards indicating an increase in the b... View the full answer