As the price of a good rises, the consumer will experience
A)a desire to consume a different bundle.
B)a decrease in utility.
C)a downward or leftward movement on the indifference map.
D)All of the above.

Question

Quizplus · Accepted Answer

As the price of a good rises, consumers may seek alternative goods (substitutes) that offer similar satisfaction at a lower cost, leading to a desire to consume a different bundle. This change can also result in a decrease in utility since the consumer might not be able to afford as much of the good or its substitutes, reducing overall satisfaction. Additionally, on an indifference map, which represents combinations of goods that provide the same level of utility, a price increase in one good can cause a movement to a lower indifference curve, reflecting a lower level of utility. This is visually represented as a downward or leftward movement on the map, indicating a shift to combinations of goods that are less preferred.

As the Price of a Good Rises, the Consumer Will