What Will a Consumer Buy If There Is a Shift

question 167

Multiple Choice

What will a consumer buy if there is a shift outward in the budget constraint

• A)less of normal goods and more of inferior goods
• B)more of normal goods and less of inferior goods
• C)more of both normal goods and inferior goods
• D)less of both normal goods and inferior goods

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Definitions:

Marginal Cost

The cost of producing one additional unit of a good or service, considering all variable resources used in production.

Monopolistic Competition

A type of imperfect competition such that many producers sell products that are differentiated from one another (e.g., by branding or quality) and hence are not perfect substitutes.

Irrational Consumers

Refers to the idea that consumers often make decisions that deviate from the assumptions of rationality in economics, such as making impulsive or emotionally driven purchases.

Market Power

The ability of a company or entity to influence the price and production levels in a market.