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Suppose a Consumer Buys Two Goods xx And yy , and Has Income Of

Question 63

Multiple Choice

Suppose a consumer buys two goods, xx and yy , and has income of $30\$ 30 . Initially Px=3P _ { x } = 3 and Py=P _ { y } = 3 and the consumer chooses basket AA with x=5x = 5 and y=5y = 5 . The prices change to Px=4P _ { x } = 4 and Py=2P _ { y } = 2 and the consumer chooses basket BB with x=1x = 1 and y=13y = 13 .


A) These choices are consistent with utility maximization.
B) These choices are not consistent with utility maximization.
C) With this information it is not possible to determine if these choices are consistent with utility maximization.
D) Basket BB must be strictly preferred to basket AA .

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