Consider a consumer who chooses a point on an initial budget constraint that gets them on...

 

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Consider a consumer who chooses a point on an initial budget constraint that gets them on the highest possible indifference curve. Now suppose they are offered a new combination of income and prices that allows them to buy the same consumption bundle as before but also allows them to change if they want to. Will they be prepared to switch to the new budget constraint? a. Only if prices are lower or income higher with the new budget constraint. b. Yes because they can do no worse than the original point and could do better. c. No because they are at their optimal point in the first place. d. Can't say because there isn't enough information. Consider a consumer who chooses a point on an initial budget constraint that gets them on the highest possible indifference curve. Now suppose they are offered a new combination of income and prices that allows them to buy the same consumption bundle as before but also allows them to change if they want to. Will they be prepared to switch to the new budget constraint? a. Only if prices are lower or income higher with the new budget constraint. b. Yes because they can do no worse than the original point and could do better. c. No because they are at their optimal point in the first place. d. Can't say because there isn't enough information.

Answer rating: 100% (QA)

ANSWER Q YES BECAUSE THEY CAN DO NO WORSE THAN THE ORIGINAL POINT AND COULD D... View the full answer