-Suppose that a consumer used to be at point R on budget line AA' in Figure 6-5,and is now at point S on line BB'.Which of the following is true if the consumer enjoys both goods?
A)The utility level at point S is higher than at point R.
B)Good X is an inferior good.
C)The consumer's income fell.
D)The price of X rose.
E)The utility level at point S is lower than at point R.

Question

-Suppose that a consumer used to be at point R on budget line AA' in Figure 6-5,and is now at point S on line BB'.Which of the following is true if the consumer enjoys both goods?
A)The utility level at point S is higher than at point R. 
B)Good X is an inferior good. 
C)The consumer's income fell. 
D)The price of X rose. 
E)The utility level at point S is lower than at point R.

Quizplus · Accepted Answer

If the consumer enjoys both goods and moves from point R to point S on a new budget line, it indicates that the consumer is able to reach a higher utility level, assuming the new budget line allows for more consumption possibilities.

-Suppose That a Consumer Used to Be at Point R