Suppose a Consumer Is Currently Buying 5 Goods So That

question 56

Multiple Choice

Suppose a consumer is currently buying 5 goods so that utility is maximized. The price of one of the goods falls while the prices of the other 4 goods do not change. The consumer should

• A) buy less of all goods being consumed to get to the optimal position.
• B) buy more of all of the goods but the one that experiences the decline in price, to get to the optimal position.
• C) buy more of all goods being consumed to get to the optimal position.
• D) buy more of the good that has experienced the fall in price to get to the optimal position.

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Definitions:

Permanent Loss

A loss that is not expected to be recovered in the future and has a lasting effect on asset value.

Inventory Market Decline

A decrease in the market value of inventory, possibly due to reduced demand, overstocking, or market conditions, necessitating a reassessment of inventory value on balance sheets.

Interim Quarterly Financial Reports

Financial statements produced on a quarterly basis to provide investors and other stakeholders with timely information on a company's financial performance.

Fiscal Year

A one-year period used by governments and businesses for accounting purposes, which may not coincide with the calendar year.