Steven Consumes Only Two Goods, Both of Which Are Normal

question 66

Essay

Steven consumes only two goods, both of which are normal goods.He is maximizing his utility in consumption of both goods.Now assume the price of one of the goods falls.How should Steven adjust his consumption after the change in price?
A.Steven should consume more of both goods.
B.Steven should consume more of the good whose price dropped and less of the good whose price did not change.
C.Steven should consume less of both goods.
D.Steven should consume less of the good whose price dropped and more of the good whose price did not change.

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Definitions:

Net Cash

The amount of cash available after accounting for cash inflows and outflows in a given period.

Financing Activities

Involves activities that result in changes in the size and composition of the equity capital and borrowings of the entity.

Net Cash

The final amount of cash available after accounting for all cash inflows and outflows, crucial for assessing financial health.

Operating Activities

Transactions and events that are directly related to the primary business operations of a company, affecting its cash flows.