A consumer maximises utility by allocating all of his income to goods X and Y. New research shows that good X is a merit good and gives the consumer greater utility than had been realised before. The consumer’s income and the prices of goods X and Y remain unchanged. If the consumer acts rationally, how will he react to the research findings?
- Aquantity of good X purchased decreases; quantity of good Y purchased increases
- Bquantity of good X purchased increases; quantity of good Y purchased decreases
- Cquantity of good X purchased increases; quantity of good Y purchased unchanged
- Dquantity of good X purchased unchanged; quantity of good Y purchased increases