There are two goods, X and Y, and the absolute price of good Y falls. It follows that
A)a person can now buy more of good Y.
B)a person cannot buy more of good Y.
C)the slope of the budget constraint changes.
D)the indifference curve between goods X and Y changes.
E)a and c

Question

Quizplus · Accepted Answer

When the absolute price of good Y falls, a person can indeed buy more of good Y with the same amount of money, which makes option A correct. Additionally, the change in the price of good Y alters the relative price between goods X and Y, leading to a change in the slope of the budget constraint, making option C correct. Options B and D are incorrect because a decrease in the price of good Y does allow for the purchase of more of good Y, and the indifference curve, which represents preferences, does not change due to a change in prices. Therefore, the correct answer is E, which includes both A and C.

There Are Two Goods, X and Y, and the Absolute