Jones spends all his income on two goods: X and Y. The price of good X...

Jones spends all his income on two goods: X and Y. The price of good X is PX = 15. The quantity of good X consumed is X = 20. The price of good Y is PY = 25 and the quantity of good Y consumed is Y = 30.

A) Based on Jones's consumption choices, what is his income?

B) If the prices next year will be PX = 9 and PY = 45, and Jones's income will be 1530, will he be better or worse off economically? Explain your answer by drawing indifference curves.

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Expert Solution

Rahul Sunny answered 1 year ago

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