Dave has $300 to spend each month on DVDs and CDs. DVDs and CDs both currently have a price of $10, and Dave is maximizing his utility by buying 20 DVDs and 10 CDs. Suppose Dave still has $300 to spend, but the price of DVDs rises to $12, while the price of CDs drops to $6. Is Dave better or worse off than he was before the price change? Use a budget constraint-indifference curve graph to illustrate your answer.
Dave has $300 to spend each month on DVDs and CDs. DVDs and CDs both currently have a price of $10, and Dave is maximizing his utility by buying 20…
Looking for a Similar Assignment? Our Experts can help. Use the coupon code SAVE30 to get your first order at 30% off!
