If Frank has been consuming 5 hamburgers per week at a consumer optimum, and the price of hamburgers falls, how will Frank respond?

Question

Quizplus · Accepted Answer

When the price of hamburgers falls, Frank's consumer surplus increases, which means he can obtain more satisfaction for the same amount of money or spend less money to obtain the same level of satisfaction. Assuming that hamburgers are a normal good and that nothing else changes, Frank will likely increase his consumption of hamburgers because of his increased purchasing power. Hence, he will buy more burgers.

If Frank Has Been Consuming 5 Hamburgers Per Week at a Consumer