Suppose a consumer who purchases only two goods is making a utility-maximizing choice and then the price of one of the goods decreases.What will happen?
A)The consumer's purchasing power will increase.
B)The consumer's total utility will increase.
C)The consumer's money income will increase.
D)both a and b
E)all of the above

Question

Quizplus · Accepted Answer

When the price of one of the goods decreases, the consumer's purchasing power increases, allowing them to buy more of both goods. This leads to an increase in the consumer's total utility, as they are able to consume more of both goods. Therefore, both option A and B are correct. However, there is no information provided to suggest that the consumer's money income has increased, so option C is not correct.

Suppose a Consumer Who Purchases Only Two Goods Is Making