If the price of a good purchased by a utility maximizing consumer goes down, all other things remain the same, and the consumer's income is adjusted so that he can just barely attain his previous level of satisfaction, and if the consumer had indifference curves of the usual shape it will be found that
A)more of the good will be purchased than before.
B)less of the good will be purchased than before.
C)the same amount of the good will be purchased as before.
D)the consumer will stop purchasing the good at all.

Question

Quizplus · Accepted Answer

When the price of a good goes down, the consumer would want to purchase more of that good using the same income as before. Since the consumer's income is adjusted to maintain the same level of satisfaction, the consumer would purchase more of the good to increase their satisfaction while keeping their income and overall expenditure the same. This will lead to a movement along the demand curve to a higher quantity demanded. Therefore, the correct choice is A.

If the Price of a Good Purchased by a Utility