The prices of good A and good B are $3 and $2 respectively. Theodore has a budget of $29 to alternate between the two. Currently, his consumption choices are 7 units of good A and 4 units of good B. If at one point he is given $5 to spend exclusively on good A, how would this affect his budget constraint? What is Theodore's bliss point if he now consumes 8 units of good A and 5 units of good B as a result?
The prices of good A and good B are $3 and $2 respectively. Theodore has a budget of $29 to alternate between the two. Currently, his consumption choices are 7 units of good A and 4 units of good B. If at one point he is given $5 to spend exclusively on good A, how would this affect his budget constraint? What is Theodore's bliss point if he now consumes 8 units of good A and 5 units of good B as a result?
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 23SQ
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The prices of good A and good B are $3 and $2 respectively. Theodore has a budget of $29 to alternate between the two. Currently, his consumption choices are 7 units of good A and 4 units of good B. If at one point he is given $5 to spend exclusively on good A, how would this affect his budget constraint? What is Theodore's bliss point if he now consumes 8 units of good A and 5 units of good B as a result?
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