Kirk consumes normal goods. If Kirk's income decreases and the prices of all goods remain unchanged, in his new consumer equilibrium, his marginal utility from each good will ________ and his total utility will ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Question

Quizplus · Accepted Answer

When income decreases, Kirk will consume less of each good, leading to an increase in the marginal utility of each good due to the law of diminishing marginal utility. However, his total utility will decrease because he can afford fewer goods overall.

Kirk Consumes Normal Goods