Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 26

A consumer is in equilibrium at point A in the accompanying figure. The price of good X is $5.
a. What is the price of good Y ?
b. What is the consumer's income?
c. At point A, how many units of good X does the consumer purchase?

d. Suppose the budget line changes so that the consumer achieves a new equilibrium at point B. What change in the economic environment led to this new equilibrium? Is the consumer better off or worse off as a result of the price change?