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question 180

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Figure: Kristin's Budget Line Use the following to answer questions: Figure: Kristin's Budget Line   -(Figure: Kristin's Budget Line)  Look at the 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.
-(Figure: Kristin's Budget Line) Look at the 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:


Definitions:

Mainstream Economics Perspective

The commonly accepted views and theories within the economics field that influence policy-making and academic research.

Labor Market

The supply and demand dynamics for labor, where employers seek to hire workers, and workers seek employment.

Workplace Governance

The systems, policies, and practices that control and direct the activities within a workplace, including the management of relationships among stakeholders.

Industrial Relations School

A field of study and practice focusing on the management of workplace and labor relations, including the roles of unions, employers, and governments.

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