Figure 21-17

-Refer to Figure 21-17.It would be possible for the consumer to reach I₂ if
A) the price of Y decreases.
B) the price of X decreases.
C) income increases.
D) All of the above would be correct.

Question

Figure 21-17
 
-Refer to Figure 21-17.It would be possible for the consumer to reach I₂ if
A) the price of Y decreases. 
B) the price of X decreases. 
C) income increases. 
D) All of the above would be correct.

Quizplus · Accepted Answer

All of the options, namely decrease in the price of Y, decrease in the price of X, and increase in income, could lead the consumer to reach point I2. A decrease in the price of Y would make Y more affordable and hence preferred over X (as utility is maximized at the highest indifference curve). Similarly, a decrease in the price of X would make X more affordable and hence preferred over Y. An increase in the income of the consumer would increase their purchasing power, which could be used to purchase more of both X and Y, leading to a higher level of utility.

Figure 21-17 -Refer to Figure 21-17.It Would Be Possible for the Consumer