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When the price of a good falls, a consumer restores single-commodity equilibrium by:
Aconsuming more until MU equals the lower price
Braising MU until it equals the old price
Ckeeping the same quantity as before
Dconsuming less until MU equals the lower price
Answer & Solution
Correct answer: A. consuming more until MU equals the lower price
1. A price fall breaks the equality $MU_x = P_x$ since MU now exceeds the new lower price.
2. The consumer buys more, and rising consumption pulls MU down until it again equals the lower price.
3. Reducing or holding quantity would not restore equality, and the new price is the relevant target, so the other options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.7_
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