If a consumer is at an optimum, consuming X and Y, and the price of Y increases, 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 Y increases, the consumer will substitute away from Y and towards X. This is because X is now relatively cheaper than Y. As a result, the consumer will purchase more X and less Y.

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