Solved

Use the Following to Answer Question

Question 68

Multiple Choice

Use the following to answer question: Use the following to answer question:   -(Figure: Kristin's Budget Line) Use Figure Kristin's Budget Line.The price of a cup of cappuccino is $3,and the price of an apple is $1.Suppose Kristin initially consumes 10 cups of cappuccino and 30 apples.Then,the price of apples increases to $3 each and the price of cappuccino remains unchanged.As a result of the price change,Kristin's optimal consumption bundle changes,reflected by a decrease in the consumption of both apples and cappuccinos.If Kristin is to maintain the same level of utility as before the price change,she must: A) increase her income. B) decrease her income. C) keep her income the same,since only one good's price changed. D) increase her income by $2.
-(Figure: Kristin's Budget Line) Use Figure Kristin's Budget Line.The price of a cup of cappuccino is $3,and the price of an apple is $1.Suppose Kristin initially consumes 10 cups of cappuccino and 30 apples.Then,the price of apples increases to $3 each and the price of cappuccino remains unchanged.As a result of the price change,Kristin's optimal consumption bundle changes,reflected by a decrease in the consumption of both apples and cappuccinos.If Kristin is to maintain the same level of utility as before the price change,she must:


A) increase her income.
B) decrease her income.
C) keep her income the same,since only one good's price changed.
D) increase her income by $2.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions