Question

# Let's say a consumer only consumes pizza and movie. When pizza price was 5 dollars and...

Let's say a consumer only consumes pizza and movie. When pizza price was 5 dollars and movie price was 10 dollars in 2016, the consumer chose Bundle 2. In 2017 pizza price increased to \$6 and movie price decreased to 9 dollars. The consumer chose bundle 3 instead of bundle 2. Let's say the consumer doesn't save at all. How did the consumer's 2017 utility turn out (1.Increased 2. Decreased 3. Didn't change 4. Unknown) ? Please explain.

Answer : The correct option is 1.

In 2016 the spending amount was (5 + 10) = \$15 and consumption bundle was 2.

In 2017 the spending amount is (6 + 9) = \$15 and consumption bundle is 3.

Here it is clear that at \$15 spending amount the total consumption level is increased by 1 bundle in 2017 in comparison to 2016 consumption bundle. As total consumption level increases here then obviously total utility level also increases in 2017 turn out. Therefore, 2017 utility turn out is increased for the consumer.

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Need Online Homework Help?

Most questions answered within 1 hours.

##### Active Questions
• 2. Perform 2 iterations of Newton’s method on f(x,y)=x^4+4x^2*y+4y^2+2x+2y starting at(1,1).
• Describe the ways in which financial management, incentives, and objectives for healthcare organizations, especially not-for-profits, tend...
• 3. If audio is added to the above video with the following specifications: · Sample rate...
• I have an object struct named Course. I also have an array Course array[CAPACITY], where capacity...
• ccording to Kottak, "Capital" refers to: a. Practicing sustainability to ensure ecological stability for long-term profit...
• Calculate the Delta G for the following reaction at 25 degrees Celcius 3Co^+2 (aq) + 2Al(s)...