Assume the consumer is correctly applyingthe rational spending rule (consumerequilibrium) for goods X and Z and he is atconsumer equilibrium. If the price of X falls,then the marginal rate of substitution of X(in absolute value) will _ and theconsumption in X willconsumer equilibrium holding all otherfactors unchanged.Group of answer choices-__at the newincrease; increasedecrease; decreasedecrease; increaseincrease; decrease

Here, it is given that a consumer is in equal it implies that marginal utility per dollar spent on…

Answered: Assume the consumer is correctly…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 6P

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True or false Law of diminishing margnal utility law states that utility derived from each successive consumption will keep falling.

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