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Colin Phillips
on Oct 14, 2024

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Prudence was maximizing her utility subject to her budget constraint.Then prices changed.After the price change she was better off.Therefore the new bundle costs more at the old prices than the old bundle did.

Utility Maximizing

The economic principle that individuals or firms seek to achieve the highest level of satisfaction or profit from their consumption or production choices.

Budget Constraint

The limit on the consumption bundles that a consumer can afford based on their income and the prices of goods and services.

  • Comprehend the impact of price changes on consumer's budget constraint and choices.
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alexa cundyOct 17, 2024
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