If a consumer is choosing the optimal combinations of two goods X and Y, and then the price of good Y decreases, this causes:
A) MU/P of good X to increase, so the consumer now must buy more X to find a new optimal combination.
B) demand for good X to increase.
C) MU/P of good Y to increase, so the consumer now must buy more Y to find a new optimal combination.
D) MU/P of good Y to decrease, so the consumer now must buy more Y to find a new optimal combination.
E) the demand for good X and good Y will not change.

Question

Quizplus · Accepted Answer

When the price of good Y decreases, the MU/P of good Y will increase because the consumer can now purchase more units of good Y for the same amount of money they were originally willing to spend. This will lead the consumer to buy more good Y and adjust their consumption of good X accordingly to find a new optimal combination. Therefore, the correct answer is C.

If a Consumer Is Choosing the Optimal Combinations of Two