Ron buys two goods, X and Y , and is at his consumer equilibrium. If the price of Y rises, which of the following situations immediately arises and how does Ron respond?
Immediately after the rise in price

Question

Ron buys two goods,  X  and  Y , and is at his consumer equilibrium. If the price of  Y  rises, which of the following situations immediately arises and how does Ron respond? 
 Immediately after the rise in price

Accepted Answer

MU X /P X   exceeds  MU Y /P Y , and Ron's quantity demanded of good  Y  decreases.

Answer

MU X /P X   exceeds  MU Y /P Y , and Ron's demand for good  Y  increases.

Answer

MU X /P X   is less than  MU Y /P Y , and Ron's demand for good  Y  increases.

Answer

MU X /P X   exceeds  MU Y /P Y , and Ron's quantity demanded for each good decreases.

Answer

MU X /P X   is less than  MU Y /P Y , and Ron's quantity demanded of good  Y  decreases.

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Ron buys two goods, X and Y , and is at his consumer equilibrium. If the pric...

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