Real income in terms of a good is defined as
A)income divided by the quantity consumed of a good.
B)the income of a producer of that good.
C)the price of one good divided by the price of another good.
D)dollar income.
E)income divided by the price of a good.

Question

Quizplus · Accepted Answer

Real income in terms of a good is defined as income divided by the price of a good, as it reflects the purchasing power of income with respect to that specific good. Dividing income by the quantity consumed of a good (A) would give the price per unit, but does not take into account changes in the price level over time. The income of a producer of that good (B), the price of one good divided by the price of another good (C), and dollar income (D) do not reflect the specific purchasing power of income with respect to a specific good.

Real Income in Terms of a Good Is Defined as