Questions: Question 5 0.5 pts Suppose you maximized your utility subject to your budget constraint by purchasing goods X and Y, both of which are normal goods. If the price of good X decreases, ceteris paribus, you should to maximize your utility. Buy less of good Y only Buy more of good X and less of good Y Buy more of good X only Buy less of good X and more of good Y Don't change consumption based on just this price change

The answer is: Buy more of good $X$ only.

Explanation for each option:

1. Buy less of good Y only: This option is incorrect. A decrease in the price of good $X$ does not directly imply that you should buy less of good $Y$. The substitution effect would typically lead you to buy more of the cheaper good $X$, not less of $Y$.

2. Buy more of good $X$ and less of good $Y: This option could be partially correct due to the substitution effect, where you might substitute good $Y$ with more of good $X$. However, without additional information about the income effect, it's not certain that you would buy less of $Y$.

3. Buy more of good X only: This is the most straightforward and correct option. When the price of good $X$ decreases, the substitution effect suggests you will buy more of $X$ because it is relatively cheaper. The income effect, since both goods are normal, might also lead you to buy more of both goods, but the primary immediate response is to buy more of the cheaper good.

4. Buy less of good $X$ and more of good $Y: This option is incorrect. A decrease in the price of good $X$ would not lead you to buy less of it; rather, you would typically buy more of it.

5. Don't change consumption based on just this price change: This option is incorrect. A change in the price of a good typically affects consumption choices due to the substitution and income effects, especially when maximizing utility.

In summary, when the price of good $X$ decreases, you should buy more of good $X$ to maximize your utility, considering the substitution effect.