Question
A consumer is in equilibrium at point A in the diagram below. The price of good X is $5.

 
 

a. What is the price of good Y?



b. What is the consumer's income?



c. At point A, how many units of good X does the consumer purchase?

 units

d. Suppose the budget line changes so that the consumer achieves a new equilibrium at point B. What change in the economic environment led to this new equilibrium?

  • The price of good Y decreased to $2.50.
  • The price of good Y increased to $10.
  • The price of good X increased to $10.
  • The price of good X decreased to $2.50.


Is the consumer better off or worse off as a result of the price change?

  • Better off
  • Worse off

 
 
 
 
 
 
 
 
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