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 has 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 purchased by a utility-maximizing consumer goes down, the consumer's purchasing power increases. The consumer can now buy more of the same good or substitute it for other goods. If the consumer prefers the good and has a diminishing marginal rate of substitution, the consumer will tend to buy more of it as its price decreases. Therefore, the consumer will purchase more of the good than before, and this choice is reflected in option A.

If the Price of a Good Purchased by a Utility-Maximizing