Final answer:
A significant change without clear causation prompts more questions in horizontal analysis. An example includes an unexpected increase in income, which requires further investigation into market conditions or business decisions.
Step-by-step explanation:
In horizontal analysis, more questions are raised when there is a change that is not immediately understandable or lacks clear causation, such as an unexpected decline or a sudden increase in a certain financial metric. If a student, for instance, observes that a company's income drastically increases without a clear reason, it prompts further investigation to comprehend underlying factors such as market conditions, management decisions, or new product introductions that may have driven the change.
When considering the impact of income increase on consumer behavior, the example provided suggests that consumers will buy more pizza. In a horizontal analysis context, a significant change in a financial statement item like revenue from pizza sales can certainly beg more questions, especially if the change is abrupt or deviates significantly from industry trends or historical performance. Comparing periods in horizontal analysis helps identify trends, but it's also important to understand what drives those trends and to consider external factors that might affect demand and financial results.