If the price of a good increases and an individual's demand is elastic,identify the correct statement about total utility (TU),marginal utility (MU),consumer surplus (CS),and total expenditure (TE).
A)TU increases, MU decreases, CS decreases, and TE decreases.
B)TU increases, MU increases, CS increases, and TE decreases.
C)TU decreases, MU increases, CS decreases, and TE increases.
D)TU decreases, MU decreases, CS decreases, and TE decreases.
E)TU decreases, MU increases, CS decreases, and TE decreases.

Question

Quizplus · Accepted Answer

If the price of a good increases, and an individual's demand is elastic, then the consumer will reduce their consumption of the good, leading to a decrease in total utility (TU) and marginal utility (MU). Moreover, as the consumer is willing to pay less for the good than the new price, consumer surplus (CS) will decrease. Lastly, as the consumer is buying fewer units of the good, the total expenditure (TE) will also decrease. Therefore, option E is the correct choice.

If the Price of a Good Increases and an Individual's