If a Consumer Is Choosing the Optimal Combinations of Two

question 83

Multiple Choice

If a consumer is choosing the optimal combinations of two goods X and Y, and then the price of good Y decreases, this causes:

• A) MU/P of good X to increase, so the consumer now must buy more X to find a new optimal combination.
• B) demand for good X to increase.
• C) MU/P of good Y to increase, so the consumer now must buy more Y to find a new optimal combination.
• D) MU/P of good Y to decrease, so the consumer now must buy more Y to find a new optimal combination.

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Definitions:

Market Risk

The risk of losses in investments due to factors that affect the overall performance of the financial markets, such as economic changes or natural disasters.

Purchasing Power Risk

The risk that the value of money will decrease over time due to inflation, affecting the real value of investments and savings.

Investment Principal

A sum of money invested initially in a financial instrument or vehicle, which serves as the base on which returns or interest is calculated.

Passive Asset Allocation

An investment strategy that aims to build a portfolio mimicking a market index's composition, requiring minimal buying and selling.