When the price of a good increases, ceteris paribus, consumers perceive:
A)an increase in wellbeing if the price increase occurs for an inferior good
B)an increase in income if the price increase occurs for a normal good
C)a loss in wellbeing since they can no longer purchase the same bundle that they had previously
D)a net gain in income if they increase consumption of some goods

Question

Quizplus · Accepted Answer

When the price of a good increases, ceteris paribus, consumers will experience a decrease in their purchasing power. This means that they can no longer purchase the same bundle of goods and services that they previously could, resulting in a loss of wellbeing. Therefore, choice C is the best answer.

When the Price of a Good Increases, Ceteris Paribus, Consumers