Assume a consumer is attempting to maximize utility subject to the budget constraint by choosing units of consumption betwee two goods: good 1 and good 2. Utility maximizing choices are provided in the following table for a baseline scenario and new scenario. Item Baseline New Price of Good 1 $10 $10 Price of Good 2 $10 $6 Income $20,000 $20,000 Units Consumed, Good 1 1000 1250 Units Consumed, Good 2 1000 1250 Utility 4000 5000 Using the table, how did the new event affect good 2? O It caused demand for good 2 to decrease. O It caused demand for good 2 to increase. O It caused quantity demanded for good 2 to increase. O It caused no change in quantity demanded for good 2. O It cause quantity demanded for good 2 to decrease. O It caused no change in demand for good 2.

Assume a consumer is attempting to maximize utility subject to the budget constraint by choosing units of consumption betwee two goods: good 1 and good 2. Utility maximizing choices are provided in the following table for a baseline scenario and new scenario. Item Baseline New Price of Good 1 $10 $10 Price of Good 2 $10 $6 Income $20,000 $20,000 Units Consumed, Good 1 1000 1250 Units Consumed, Good 2 1000 1250 Utility 4000 5000 Using the table, how did the new event affect good 2? O It caused demand for good 2 to decrease. O It caused demand for good 2 to increase. O It caused quantity demanded for good 2 to increase. O It caused no change in quantity demanded for good 2. O It cause quantity demanded for good 2 to decrease. O It caused no change in demand for good 2.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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