Final answer:
Increasing the capitalization rate would typically lower the price of the business in an earnings-based valuation because it indicates a higher return demanded by the investor, thus implying a lower valuation.
Step-by-step explanation:
If the capitalization rate is increased, the effect on the price of the business using earnings-based valuation will typically be a decrease. The capitalization rate, often denoted as 'cap rate', is used to estimate the investor's potential return on an investment, where a higher cap rate implies a higher return demanded by the investor. Since the business value can be calculated as the net operating income (NOI) or earnings divided by the cap rate, an increase in the cap rate would mean a lower business valuation as it represents a higher return expectation on the investment. Hence, the correct answer is b. Decrease.