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

Answer

MU X /P X   exceeds  MU Y /P Y , so Ron increases his quantity demanded of good  X .

Answer

MU X /P X   exceeds  MU Y /P Y , so Ron increases his quantity demanded of both goods  X  and  Y .

Answer

MU X /P X   is less than  MU Y /P Y , and Ron moves down along his demand curve for good  X .

Answer

MU X /P X   is less than  MU Y /P Y , and Ron moves up along his demand curve for good  X .

Answer

MU X /P X   exceeds  MU Y /P Y , so Ron decreases his quantity demanded of good  X .

Crowdly

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

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