Steven Consumes Only Two Goods, Both of Which Are Normal

question 459

Essay

Steven consumes only two goods, both of which are normal goods.He is currently maximizing his utility in consumption of both goods.Now assume the price of one of the goods increases.As he adjusts to this event:
A.the marginal utility of the good whose price did not change will rise, and the marginal utility of the other good will fall.
B.the marginal utility of the good whose price did not change will fall, and the marginal utility of the other good will rise.
C.the marginal utility of the good whose price did not change will rise, and the marginal utility of the other good will also rise.
D.the marginal utility of the good whose price did not change will fall, and the marginal utility of the other good will also fall.

---

Definitions:

Unionized Sectors

Industries or sectors where workers are members of a union, which negotiates wages, working conditions, and other employment terms on their behalf.

Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Unionized Labor

Workers who are members of a union, which is an organization that negotiates with employers on behalf of its members for wages, hours, benefits, and working conditions.

Above-Equilibrium Wages

Wages that are higher than the market equilibrium, often set above the competitive level to attract or retain employees, possibly leading to reduced labor turnover.