When income increases: How are the following measures affected? *assume the following effects are in time order Increase (right) Decrease (left) No effect Unknown Firm Revenue Firm profits (assume proportionate costs) Output Supply shifts Output market price (after supply shift only) Factor demand shifts

When income increases:

1. Firm revenue: Increase because with the passage of time if income increases so proportionally revenue will also rise as an output of investment and efforts.
2. Firm profits [assume proportionate costs]: Increase with rising in income there is an increase in revenue and if revenue increases with increase in proportionate cost also, there will be an increase in profits too sure to rise in quantum.
3. Output supply shifts: Increase because more the income then more is the capital with the owners and they can invest more and increase the supply output.
4. Output market price [after supply shift only]: After supply shift to right due to increase in income there will be a decrease in output market price as income increases, there is an increase in demand and price will fall as with demand price have an inverse relation.
5. Factor demand shifts: When income increases demand the factors increase and shift rightwards.