Steven Consumes Only Two Goods, Both of Which Are Normal

question 173

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 falls.As he adjusts to this event:
A.the marginal utility of the good whose price changed will rise, and the marginal utility of the other good will fall.
B.the marginal utility of the good whose price changed will rise, and the marginal utility of the other good will also rise.
C.the marginal utility of the good whose price changed will fall, and the marginal utility of the other good will also fall.
D.the marginal utility of the good whose price changed will fall, and the marginal utility of the other good will rise.

---

Definitions:

Artificial Time Periods

A concept in accounting referring to arbitrary time intervals chosen for the purpose of financial reporting, such as quarters or fiscal years.

Cash Basis Accounting

An accounting method where revenues and expenses are recognized when cash is received or paid, rather than when earned or incurred.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from revenue.

Sales

The total amount of goods or services sold by a company within a specific period; it is a primary source of revenue for retail and manufacturing businesses.