When the price of one good changes,while the prices of all others stay the same:
A) the change in relative prices is reflected in a change in the slope of the budget constraint.
B) the change in relative prices can be thought of as a change in the opportunity costs of each good.
C) the change in relative prices is reflected in a change in the marginal utility per dollar spent on each good.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

All of these statements are true. 
A) When the price of one good changes, the slope of the budget constraint changes because the relative price of the two goods changes. 
B) The change in relative prices can be thought of as a change in the opportunity costs of each good because consumers have to give up more of the good that has become relatively more expensive to purchase the same amount of the other good. 
C) The change in relative prices is reflected in a change in the marginal utility per dollar spent on each good because when the price of one good changes, it affects the consumer's ability to buy the same amount of each good, and hence the marginal utility per dollar spent on each good changes.

When the Price of One Good Changes,while the Prices of All