Suppose a household is faced with the choice between consuming gasoline ( G ) and all other goods ( OG ) . Today the household consumes 800 liter of gasoline a year. Suppose then that a gasoline price increase is perfectly compensated by a wage increase . If the family followed the utility maximization model , how would this affecti their consumption of gasoline ? Explain by using a figure

Exploring Economics
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ISBN:9781544336329
Author:Robert L. Sexton
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Chapter10: Consumer Choice Theory
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b ) Suppose a household is faced with the choice between consuming gasoline ( G ) and all other goods ( OG ) . Today the household consumes 800 liter of gasoline a year.

Suppose then that a gasoline price increase is perfectly compensated by a wage increase . If the family followed the utility maximization model , how would this affecti their consumption of gasoline ? Explain by using a figure . 

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