Exhibit 6-11
-If Ken is originally at point a in Exhibit 6-11 and then moves to point b due to a reduction in the price of neckties, his expenditure
A) increases from $20 to $25, increasing both consumer surplus and total utility
B) increases from $20 to $25, decreasing both consumer surplus and total utility
C) stays at $20, leaving both consumer surplus and total utility unchanged
D) stays at $20, but both consumer surplus and total utility increase
E) decreases as price falls, increasing both consumer and surplus and total utility

Question

Exhibit 6-11 
-If Ken is originally at point a in Exhibit 6-11 and then moves to point b due to a reduction in the price of neckties, his expenditure
A) increases from $20 to $25, increasing both consumer surplus and total utility 
B) increases from $20 to $25, decreasing both consumer surplus and total utility 
C) stays at $20, leaving both consumer surplus and total utility unchanged 
D) stays at $20, but both consumer surplus and total utility increase 
E) decreases as price falls, increasing both consumer and surplus and total utility

Quizplus · Accepted Answer

When the price of neckties falls, Ken can buy more neckties for the same expenditure of $20, increasing his consumer surplus and total utility without changing his total expenditure.

Exhibit 6-11 -If Ken Is Originally at Point a in Exhibit 6-11