What is the effect of a fall in the price of a normal good on the consumer's choice?
A)She will buy more of the good but reach a lower indifference curve.
B)She will buy less of the good but reach a higher indifference curve.
C)She will buy more of the good and reach a higher indifference curve.
D)She will buy the same quantity of the good and stay on the same indifference curve.
E)She will buy more of the good and stay on the same indifference curve.

Question

Quizplus · Accepted Answer

When the price of a normal good falls, the consumer is able to purchase more of the good with the same amount of income. This allows the consumer to move up to a higher indifference curve, indicating an increase in overall satisfaction or utility gained from the increased consumption of the good. Therefore, the consumer will buy more of the good and reach a higher indifference curve.

What Is the Effect of a Fall in the Price