Use the Following to Answer Question

question 68

Multiple Choice

Use the following to answer question:
-(Figure: Kristin's Budget Line) Use Figure Kristin's Budget Line.The price of a cup of cappuccino is $3,and the price of an apple is $1.Suppose Kristin initially consumes 10 cups of cappuccino and 30 apples.Then,the price of apples increases to $3 each and the price of cappuccino remains unchanged.As a result of the price change,Kristin's optimal consumption bundle changes,reflected by a decrease in the consumption of both apples and cappuccinos.If Kristin is to maintain the same level of utility as before the price change,she must:

• A)increase her income.
• B)decrease her income.
• C)keep her income the same,since only one good's price changed.
• D)increase her income by $2.

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Definitions:

Change-of-Base Formula

A formula that allows the base of a logarithm to be changed, facilitating easier calculation.

Properties of Logarithms

The properties of logarithms are mathematical rules that apply to logarithmic functions, including product, quotient, and power rules.

Logarithm

The power to which a base, such as 10, must be raised to produce a given number. Expressed as \(log_{base}(number) = exponent\).

Function

A relation between sets that associates each element of a first set to exactly one element of the second set.