ome / My courses / Business Administration / Managerial Economics-OMBA 8 Week 3-

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ome / My courses / Business Administration / Managerial Economics-OMBA 8 Week 3-July 19, 2018-Theory of Consumer Behavior and Elasticity of Demand / Chapter 5 Quiz - Due by midnigt Suppose a consumer who purchases only two goods is making a utility- maximizing choice and then the price of one of the goods decreases. What lot yet of will happen? oints out Flag Select one o a The consumer will be able to reachr a higher level of utility. O b. The consumer's income will decrease c The consumer's utility will decrease. d The consumer will purchase less of the good whose price O decreased Next page

Explanation / Answer

Answer) A.) The consumer will be able to reach a higher level of utility.

Decrease in the price of a good leads to higher quantity consumed of atleast one good or both the goods. Also decrease in the price of the good increases relative income.

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