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Q1) A utility-maximizing student with smooth, convex indifference curves spent her entire allowance on books (B) and movies (M) last month. This month, per-unit book price doubles and per-unit movie price triples. She complains to her parents, and as result hey increases her allowance so that, if desired, she could buy same bundle this month as she did in last. Are the following statements true, false, or uncertain?

a) She watches more movies and reads fewer books than last month.

b) She is just as well off as she was last month.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M922939

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