Suppose That, from an Initial Individual Consumer Equilibrium Position in the Indifference

Essay

Suppose that, from an initial individual consumer equilibrium position in the indifference curve-budget line diagram, the price of good X rises while the price of good Y falls. What will happen to the relative consumption of the two goods by the consumer and why? Can it be specified whether the consumer's level of satisfaction has increased or decreased because of this change in absolute and relative prices? Why or why not? Could the satisfaction level of some consumers increase and the satisfaction level of other consumers decrease because of the price changes? Explain.