If a consumer is at an optimum, consuming X and Y, and the price of X decreases, then to get to a new equilibrium the consumer must
A) purchase less X.
B) purchase less of both X and Y.
C) purchase more X.
D) purchase more of both X and Y.

Question

Quizplus · Accepted Answer

When the price of X decreases, it becomes relatively cheaper compared to Y. This will make the consumer shift their consumption towards X, i.e. they will purchase more X and less Y. Therefore, the new equilibrium will involve purchasing more X and less Y.

If a Consumer Is at an Optimum, Consuming X and Y