Assume the consumer is correctly applying the rational spending rule (consumer equilibrium) for goods X and Z and he is at consumer equilibrium. If the price of X falls, then the marginal rate of substitution of X (in absolute value) will __ and the consumption in X will consumer equilibrium holding all other factors unchanged. Group of answer choices -_at the new increase; increase decrease; decrease decrease; increase increase; decrease
Assume the consumer is correctly applying the rational spending rule (consumer equilibrium) for goods X and Z and he is at consumer equilibrium. If the price of X falls, then the marginal rate of substitution of X (in absolute value) will __ and the consumption in X will consumer equilibrium holding all other factors unchanged. Group of answer choices -_at the new increase; increase decrease; decrease decrease; increase increase; decrease
Chapter10: Consumer Choice Theory
Section: Chapter Questions
Problem 6P
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