Read the two statements and choose the correct option.
I. A fall in the price of X, with everything else unchanged, makes a consumer in equilibrium buy more of X.
II. A fall in the price of X lowers MUₓ ÷ Pₓ.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

I is true: X now gives more utility per rupee, so he shifts spending towards it.
II is false: a lower Pₓ raises MUₓ ÷ Pₓ.

Ten questions from Utility & Consumer's Equilibrium, at your own pace.

Ten questions from Utility & Consumer's Equilibrium, at your own pace.

Read the two statements and choose the correct option.I. A fall in the price of X, with everything else unchanged, makes a consumer in equilibrium buy more of X.II. A fall in the price of X lowers MUₓ ÷ Pₓ.