When the price of a good increases, all else equal, the higher price
A)reduces the consumer's set of buying opportunities.
B)leads to a parallel shift of the budget constraint.
C)will necessarily lead to an increase in the consumption of goods whose price did not change.
D)generally discourages the consumption of inferior goods.

Question

Quizplus · Accepted Answer

When the price of a good increases, it reduces the consumer's purchasing power and thus limits their set of buying opportunities. The increase in price will generally make the good less affordable, especially for low-income consumers, which will reduce the overall quantity demanded by consumers.

When the Price of a Good Increases, All Else Equal