Javon is consuming his optimal utility-maximizing consumption bundle of lobster and macaroni-and-cheese dinners when he loses his job and has less money to spend. Both are normal goods. When he adjusts his consumption to reflect the new level of income, the number of macaroni-and-cheese dinners he consumes:
A) rises.
B) falls.
C) stays the same.
D) changes, but it is impossible to determine in what way.

Question

Quizplus · Accepted Answer

Since both goods are normal goods, a decrease in income will lead to a decrease in the consumption of both goods, including macaroni-and-cheese dinners.

Javon Is Consuming His Optimal Utility-Maximizing Consumption Bundle of Lobster