Will simon be able to continue to consume initial bundle

Reference no: EM133650114

Question: Assume that the initial price of good x and y are 10 and 10 respectively. Simon has an income of 100 and his initial bundle of consumption is given as A(5, 5). When price of good x falls to 5 while price of good y rises to 15 while income remains unchanged. Will Simon be able to continue to consume initial bundle A? If yes, will Simon be rational if he continue to consume at initial bundle A? Explain your point graphically.

Reference no: EM133650114

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