In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer purchases _______ of the good and moves to a _______ indifference curve.
A) more; higher
B) more; lower
C) less; lower
D) less; higher

Question

Quizplus · Accepted Answer

When the price of a good increases, the consumer generally purchases less of that good due to the substitution and income effects, and moves to a lower indifference curve because they can no longer afford the combinations of goods that provided the same level of utility as before the price increase.

In an Indifference Curve/budget Line Diagram, Generally When the Price