Gerald spends his weekly income on gin and cocktail olives. The price of gin has

Question

Gerald spends his weekly income on gin and cocktail olives. The price of gin has risen from $7 to $9 per bottle, the price of cocktail olives has fallen from $6 to $5 per jar, and Gerald's income has stayed fixed at $46 per week. Since the price changes, Gerald has been buying 4 bottles of gin and 2 jars of cocktail olives per week. At the original prices, 4 bottles of gin and 2 jars of cocktail olives would have OA. A. exactly exhausted his income. B. cost less than his income C. cost more than his income. O c. D. could have maximized his satisfaction given his budget constraint.

Explanation / Answer

B. Cost less than his income.

As, at orginal price , total cost = 7*4 + 6*2 = 40 , Whereas Income = 46

D Price of Apple 6, and price of pears 5

As, 4.5*6 = 5.4*5

D. L shaped.

As Dave has strict preference

If you don't understand anything then comment, I'ill revert back on the same. :)

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