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A consumer spends her weekly income of $30 on q₁, and q2. Initially, when the prices are p₁=p2=2, she buys q₁ = 10 and q2 = 5. After the prices change to p₁ = 1 and p2= 3, she purchases q₁ = 6 and q2 = 8. Draw her budget lines and choices in a diagram. Use a revealed preference argument to discuss whether she is maximizing her utility before and after the price changes.

A consumer spends her weekly income of $30 on q₁, and q2. Initially, when the prices are p₁=p2=2, she buys q₁ = 10 and q2 = 5. After the prices change to p₁ = 1 and p2= 3, she purchases q₁ = 6 and q2 = 8. Draw her budget lines and choices in a diagram. Use a revealed preference argument to discuss whether she is maximizing her utility before and after the price changes.

Database System Concepts
Database System Concepts
7th Edition
ISBN:9780078022159
Author:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Publisher:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Chapter1: Introduction
Section: Chapter Questions
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A consumer spends her weekly income of $30 on q1, and q2. Initially, when the prices are pi=p2= 2, she buys q₁ = 10 and q2 = 5. After the prices change to pi= 1 and p2 = 3, she purchases q1 = 6 and q2 = 8. Draw her budget lines and choices in a diagram. Use a revealed preference argument to discuss whether she is maximizing her utility before and after the price changes.
Transcribed Image Text:A consumer spends her weekly income of $30 on q1, and q2. Initially, when the prices are pi=p2= 2, she buys q₁ = 10 and q2 = 5. After the prices change to pi= 1 and p2 = 3, she purchases q1 = 6 and q2 = 8. Draw her budget lines and choices in a diagram. Use a revealed preference argument to discuss whether she is maximizing her utility before and after the price changes.
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