Felix chooses between clothing, 9₁, and food, 9₂. His initial income is $4,000 a month, p₁ = 400, and p2 = 40. At his initial bundle, he consumes q₁ = 2 and q₂ = 80. Later, his income rises to $4,800 and the price of clothing rises to p₁ = $600, but the price of food does not change (p₂ = 40). As a result, he reduces his consumption of clothing to q₁ =1. Using a revealed preference reasoning (that is, knowing nothing about his indifference curves), can you determine how he ranks the two bundles? O A. Felix may prefer his initial bundle or he may be indifferent between them. O B. Felix is indifferent between his initial bundle and his new bundle. O C. Felix prefers his new bundle. O D. Felix prefers his initial bundle. O E. Insufficient information exists to determine which bundle Felix prefers.
Felix chooses between clothing, 9₁, and food, 9₂. His initial income is $4,000 a month, p₁ = 400, and p2 = 40. At his initial bundle, he consumes q₁ = 2 and q₂ = 80. Later, his income rises to $4,800 and the price of clothing rises to p₁ = $600, but the price of food does not change (p₂ = 40). As a result, he reduces his consumption of clothing to q₁ =1. Using a revealed preference reasoning (that is, knowing nothing about his indifference curves), can you determine how he ranks the two bundles? O A. Felix may prefer his initial bundle or he may be indifferent between them. O B. Felix is indifferent between his initial bundle and his new bundle. O C. Felix prefers his new bundle. O D. Felix prefers his initial bundle. O E. Insufficient information exists to determine which bundle Felix prefers.
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter7: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 4CQ
Related questions
Question
![Felix chooses between clothing, 9₁, and food, 92. His initial income is $4,000 a month, p₁ = 400, and p₂ = 40. At
his initial bundle, he consumes q₁ = 2 and q₂ = 80. Later, his income rises to $4,800 and the price of clothing rises
to p₁ = $600, but the price of food does not change (p2 = 40). As a result, he reduces his consumption of clothing
to q₁ =1. Using a revealed preference reasoning (that is, knowing nothing about his indifference curves), can you
determine how he ranks the two bundles?
O A. Felix may prefer his initial bundle or he may be indifferent between them.
B. Felix is indifferent between his initial bundle and his new bundle.
O C. Felix prefers his new bundle.
D. Felix prefers his initial bundle.
O E. Insufficient information exists to determine which bundle Felix prefers.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6c4279b5-95a1-4f19-b5dc-b9697b0d6a5a%2Fbfd498dc-dc1e-473c-8e53-f7305fc7fa9b%2Fnjn6clo_processed.png&w=3840&q=75)
Transcribed Image Text:Felix chooses between clothing, 9₁, and food, 92. His initial income is $4,000 a month, p₁ = 400, and p₂ = 40. At
his initial bundle, he consumes q₁ = 2 and q₂ = 80. Later, his income rises to $4,800 and the price of clothing rises
to p₁ = $600, but the price of food does not change (p2 = 40). As a result, he reduces his consumption of clothing
to q₁ =1. Using a revealed preference reasoning (that is, knowing nothing about his indifference curves), can you
determine how he ranks the two bundles?
O A. Felix may prefer his initial bundle or he may be indifferent between them.
B. Felix is indifferent between his initial bundle and his new bundle.
O C. Felix prefers his new bundle.
D. Felix prefers his initial bundle.
O E. Insufficient information exists to determine which bundle Felix prefers.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 7 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Microeconomics: Private and Public Choice (MindTa…](https://www.bartleby.com/isbn_cover_images/9781305506893/9781305506893_smallCoverImage.gif)
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
![Economics: Private and Public Choice (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781305506725/9781305506725_smallCoverImage.gif)
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
![Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
![Microeconomics: Private and Public Choice (MindTa…](https://www.bartleby.com/isbn_cover_images/9781305506893/9781305506893_smallCoverImage.gif)
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
![Economics: Private and Public Choice (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781305506725/9781305506725_smallCoverImage.gif)
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
![Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
![Microeconomics](https://www.bartleby.com/isbn_cover_images/9781337617406/9781337617406_smallCoverImage.gif)