Question

Increase in income of buyers of food, ground rent is likely to?

a. increase
b. decrease
c. will not change
d. the result is not predictable

Answer 1

In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service. The relationship between income and the quantity demanded is a positive one, as income increases, so does the quantity of goods and services demanded. If the demand for food increases, the prices for food increase too. Connection with ground rent is possible, but the result is not predictable.
So, the right answer is d. the result is not predictable