Exhibit 6A-5 Consumer Equilibrium

-Given the budget lines and indifference curves shown in Exhibit 6A-5, if the budget line shifts from AC to AB, then the consumer will purchase:
A) more of both goods Y and X.
B) a higher level of total utility.
C) less of both goods X and Y.
D) more of good Y and less of good X.

Question

Exhibit 6A-5 Consumer Equilibrium
​ 
-Given the budget lines and indifference curves shown in Exhibit 6A-5, if the budget line shifts from AC to AB, then the consumer will purchase:
A) more of both goods Y and X. 
B) a higher level of total utility. 
C) less of both goods X and Y. 
D) more of good Y and less of good X.

Quizplus · Accepted Answer

When the budget line shifts from AC to AB, the consumer's purchasing power decreases, leading to a decrease in the quantity demanded for a normal good (good X) and an increase in quantity demanded for an inferior good (good Y). Therefore, the consumer will purchase more of good Y and less of good X.