Posted by **Jake** on Tuesday, October 2, 2012 at 1:20am.

When the price of X is $1 and the price of Y is $1 and income is I, Joe Panther spends $100 on good X. One day Joe is walking down Downer street and is dismayed to discover that the price of good X has increased to $2. However, moments later Joe is delighted to find a $100 bill on the street. Use budget lines and indifference curves to answer the following question, leaving his unknown income as the variable I. Assume that he has normal convex shaped indifference curves and that he spends all of his income.

A)How many units of goods X and Y does Joe purchase before the price increase and finding the $100? Part of your answer will be in terms of prices and income.

B)After the price increase and finding the money can Joe still afford the same number of units of X and Y as in part A?

C)Is Joe better off, worse off, or just the same as before the price increase and finding the money? In other words, is utility higher in part A) or when Px=2 and income is I+100?

## Answer This Question

## Related Questions

- Economics - 17. The current price for a good is $20, and 100 units are demanded ...
- Economics - The Own price elasticity of demand for good X is -2, its income ...
- math - joe left a campsite on a trip down the river in a canoe, traveling a 6 km...
- Economics - There are two brothers, Joe and Marc who both like candy. When Joe ...
- English - 1. When he was walking down the street, he ran into Miss Fairchild. (...
- Managerial Economic - The equation for a demand curve has been estimate to be Q...
- Economics - Joe's utility over consumption and leisure is given by c^(1/2)+@l^(1...
- math - Joe decides to take his six year old son to the planetarium. The price ...
- Math - Joe and Steve went to the store and Joe had seen this jacket that he had ...
- physical science - Joe baked a cake for his mother's birthday. When he removed ...

More Related Questions