Question

2 consumption choices and behavioral economics wednesday by 11:59pm points 100 submitting an external tool the figure above shows a budget constraint curve for electronic devices. the utility - maximizing choice labeled m. assume that electronic devices are normal goods. if the price of electronic devices increases, which of the following could be the location of the new utility - maximizing choice? select the correct answer below: a b c the utility - maximizing choice will remain at m.

Explanation:

Step1: Understand price - quantity relationship

When the price of a normal good (electronic devices here) increases, the budget - constraint curve pivots inwards around the intercept on the axis of "Everything Else". The consumer will buy less of the good whose price has increased.

Step2: Analyze the position of new utility - maximizing choice

Point M is the initial utility - maximizing choice. When the price of electronic devices increases, the new utility - maximizing choice will be to the left of M on the new budget - constraint curve. Point A is to the left of M.

Answer:

A. A