Question

Martin purchases 100 loaves of bread per year when the price of bread is $1.00 per...

Martin purchases 100 loaves of bread per year when the price of bread is $1.00 per loaf. The price increases to $1.50. To offset the harm done by this price increase, Martin's father gives him $50 per year.

a)Will Martin be better or worse off after the price increase plus the gift than he was before?

b. What will happen to Martin's consumption of bread?

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Answer #1

(A) ANSWER ::

After The Price Increase Of Loaves of bread Martin was worse off Because At First He Purchase 100 Loaves of bread At The Price Of $100 But After The Price change He Purchase 100 loaves of bread at the price of $150 So Because Of Price Change Marting Have To Pay Extra $50 For Loaves of bread. But After Receiving Gift Of $50 Martin Was Better Off Because It compansate The Extra Amount That He Pay On The Loaves of Bread.

Q-B:: ANSWER ::

After The Price Increase and Receiving Gift Martin Consumption Did Not Change Because When Price Increase Martin Have To Pay $50 Extra For Loaves Of Bread So Because of That the Consumption Should Decrease But His Father Give Him Gift Of $50 Per Year So Because Of That Martin Purchase As Much Loaves Of Bread As He Did before So It Would Not Change The Consumption of Martin When Price Is changed.

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