If the Price of a Good Purchased by a Utility-Maximizing

question 182

Multiple Choice

If the price of a good purchased by a utility-maximizing consumer goes down,all other things remain the same,and the consumer's income is adjusted so that he can just barely attain his previous level of satisfaction,and if the consumer has indifference curves of the usual shape,it will be found that:

• A) more of the good will be purchased than before.
• B) less of the good will be purchased than before.
• C) the same amount of the good will be purchased as before.
• D) the consumer will stop purchasing the good at all.

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Definitions:

Variable Expenses

Expenses that change in proportion to the activity of a business.

Fixed Costs

Operating expenses that stay constant regardless of changes in the level of output or sales volume, like leases and salaries.

Asset Investment

The use of funds to purchase property, securities, or other assets to generate returns or achieve strategic goals.

Operating Assets

Assets used in the day-to-day operations of a business to generate revenue, excluding investment and idle assets.