A consumer has been buying 3 magazines and 2 books a month for many months. The price of books then increases. To attain a new optimum, the consumer will
A) buy more magazines because they are now relatively more valuable than they were before, while continuing to buy the same number of books.
B) buy more books because they are now relatively more valuable than they were before.
C) buy the same number of books and magazines as before because they provide different types of utility.
D) buy fewer books than before because they are relatively more expensive than they were before.

Question

Quizplus · Accepted Answer

Since the price of books has increased, they are relatively more expensive than before. Therefore, the consumer will buy fewer books than before to maintain their budget and attain a new optimum. The consumer may choose to continue buying the same number of magazines as before or adjust their consumption of magazines as well based on their preferences and budget constraints.

A Consumer Has Been Buying 3 Magazines and 2 Books