When the price of a good increases,the higher price has what result,all else being equal
A)It contracts the consumer's set of buying opportunities.
B)It leads to a parallel shift of the linear budget constraint.
C)It will necessarily lead to an increase in the consumption of goods whose price did not change.
D)It generally discourages the consumption of inferior goods.

Question

Quizplus · Accepted Answer

When the price of a good increases, it becomes relatively more expensive compared to other goods. This contraction in the set of buying opportunities is known as a decrease in purchasing power. Consumers may switch to substitute goods or reduce their overall consumption of the good that experienced the price increase.

When the Price of a Good Increases,the Higher Price Has