Murphy Used to Consume 100 Units of X and 50

question 33

Multiple Choice

Murphy used to consume 100 units of X and 50 units of Y when the price of X was $2 and the price of Y was $4.If the price of X rose to $4 and the price of Y rose to $7, how much would Murphy's income have to rise so that he could still afford his original bundle?

• A)$500
• B)$750
• C)$350
• D)$250
• E)None of the above.

---

Definitions:

Public Ownership

The ownership of assets by the government or state, as opposed to private sector ownership, often found in utilities, transportation, and certain industries.

Total Surplus

The total net gain for society from producing and consuming a good, encapsulated by the addition of consumer surplus and producer surplus.

Profit Maximization

The technique a firm applies to set the price and production level for the best profit return.

Price

The sum of money needed to buy a product, service, or asset.