Steven Consumes Only Two Goods, Both of Which Are Normal

question 315

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 increases.How should Steven's consumption change?
A.Steven should consume more of the good whose price rose and less of the good whose price did not change.
B.Steven should consume more of both goods.
C.Steven should consume less of the good whose price rose and more of the good whose price did not change.
D.Steven should consume less of both goods.

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Definitions:

Actual Cause

The direct reason or factor that produces an effect, leading to a specific outcome or event.

Reasonableness of Risk

The assessment of whether the risk of harm in a situation is justified under the circumstances.

Magnitude

The size, extent, or importance of something, often used in reference to quantitative measurements or perceived impact.

Social Utility

The overall contribution that an action or policy makes toward the good or welfare of a society.