Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increase in quantity demanded for that good
B
Decrease in overall utility
C
No change in consumption
D
Increase in price of other goods
Understanding the Answer
Let's break down why this is correct
Answer
When the price of a good decreases, consumers can buy more of that good without spending more money. This change allows them to feel happier or have more satisfaction, which is what we call utility. For example, if a person usually buys two pizzas for $20 each but the price drops to $10, they can now buy four pizzas for the same $40 budget. This means they can enjoy more pizzas or save some money for other things, maximizing their overall happiness. So, a lower price helps consumers get more value from their budget, improving their utility.
Detailed Explanation
When the price goes down, people can buy more of that good with the same amount of money. Other options are incorrect because Some might think that lower prices mean less value; This option suggests that price changes don't matter.
Key Concepts
price change
Topic
Utility Maximization After Price Change
Difficulty
easy level question
Cognitive Level
understand
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