Suppose that a consumer is at an optimum consuming A and B. If the price of A falls, then to get to a new equilibrium the consumer must
A) purchase less A and more B.
B) purchase less B and less A.
C) purchase more A.
D) purchase more B.

Question

Quizplus · Accepted Answer

According to the law of demand, when the price of A falls, the quantity demanded of A increases. Since A was already being consumed at the optimum level, the consumer will now buy more A to maintain the optimal consumption bundle. Therefore, the consumer will purchase more of A, and the consumption of B will remain the same.

Suppose That a Consumer Is at an Optimum Consuming a and B