How does a decrease in price of a certain good affect the utility-maximizing choices?
this is microeconomics
Answer:
For almost all types of goods, utility would be higher with a fall in the price of a good. It would result in being able to consume more of all goods, assuming that income is being held constant.
When the price of Good X falls, we will tend to consume more of Good X. But, since the price has fallen, we will almost surely spend less on the total consumption of X, leaving some extra income for consumption of other goods.
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Answer:
For almost all types of goods, utility would be higher with a fall in the price of a good. It would result in being able to consume more of all goods, assuming that income is being held constant.
When the price of Good X falls, we will tend to consume more of Good X. But, since the price has fallen, we will almost surely spend less on the total consumption of X, leaving some extra income for consumption of other goods.
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