Consider two lottery winners,Tino who is 65 years old and Sasha who is 32 years old.Which of these two would be expected to have the larger income effect,all else equal?
A) Sasha
B) Tino
C) Both would have no income effect.
D) Both would have equal income effects.

Question

Quizplus · Accepted Answer

Tino, being 65 years old, is likely retired or nearing retirement, and thus, a lottery win would represent a significant change in his financial situation, leading to a larger income effect compared to Sasha, who is 32 and likely in the midst of her career with potential for income growth independent of the lottery win.

Consider Two Lottery Winners,Tino Who Is 65 Years Old and Sasha