Ajay and Florencia each have a budget of $80 per month to spend on downloaded music tracks

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Ajay and Florencia each have a budget of $80 per month to spend on downloaded music tracks and live concerts. At the initial prices, Ajay consumes both goods but Florencia buys only downloaded music and does not go to live concerts. Now the price of live concerts falls. Use figures to show that Ajay’s utility must increase and that Florencia’s utility may increase or stay the same but cannot fall.

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Managerial Economics And Strategy

ISBN: 9780134899701

3rd Edition

Authors: Jeffrey M. Perloff, James A. Brander

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