Income decreases cause a decrease in a household's choice set.

Income Decreases

A situation where an individual's or household's earnings fall over a period, affecting their purchasing power and standard of living.

Choice Set

The collection of options or alternatives from which a decision-maker is able to choose in a decision-making process.

Understand the importance of variations in income on the options available to consumers and their spending limits.

Verified Answer

Final Answer :

True

Explanation :

A decrease in income reduces the amount of goods and services a household can afford, thus limiting their choice set.

Learning Objectives

Understand the importance of variations in income on the options available to consumers and their spending limits.