Which of the following examples identifies the income effect of a ...

[urbanoutfitters]

Which of the following examples identifies the income effect of a price change?
 
  A) When Gary's income doubles his wine consumption doubles, the price of wine remaining unchanged.
  B) When the price of diesel falls, consumers start purchasing more petroleum-powered vehicles.
  C) While purchasing shirts and jeans, when the price of a pair of jeans falls, Jack purchases more of both jeans and shirts.
  D) While purchasing pens and pencils, when the price of pens falls, Jill purchases more pens and fewer pencils.

Question 2

A sensible buyer will want to acquire additional information before committing herself as long as the expected value of the information she is gathering
 
  A) is greater than the anticipated value of the purchase.
  B) is greater than the expected cost of acquiring it.
  C) will enable her to avoid all mistakes.
  D) will enable her to avoid possible mistakes she will subsequently regret having made.

[olderstudent]

Answer to Question 1

C

Answer to Question 2

B

[urbanoutfitters]

Thanks for the timely response, appreciate it

[cassie_ragen]

Gracias!