If income increases due to a decrease in taxes,then
A) utility will increase because consumers can afford a larger bundle of goods.
B) utility will fall because consumers will be forced to buy a smaller bundle of goods.
C) utility will remain constant.
D) utility will increase because consumers will be forced to buy a smaller bundle of goods.

Question

Quizplus · Accepted Answer

With a decrease in taxes, consumers will have more disposable income which means they can afford to purchase a larger bundle of goods. This will increase their utility as they have more options to choose from and can potentially satisfy more of their wants or needs.

If Income Increases Due to a Decrease in Taxes,then