Asked by
Colin Phillips
on Oct 14, 2024Verified
Prudence was maximizing her utility subject to her budget constraint.Then prices changed.After the price change she was better off.Therefore the new bundle costs more at the old prices than the old bundle did.
Utility Maximizing
The economic principle that individuals or firms seek to achieve the highest level of satisfaction or profit from their consumption or production choices.
Budget Constraint
The limit on the consumption bundles that a consumer can afford based on their income and the prices of goods and services.
- Comprehend the impact of price changes on consumer's budget constraint and choices.
Verified Answer
AC
Learning Objectives
- Comprehend the impact of price changes on consumer's budget constraint and choices.
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