Question: Yangjie buys smoothies and sushi. The price of a smoothie is $5, and the price of sushi is $1 a piece. Each month, Yangjie spends all of her income and buys 10 smoothies and 20 pieces of sushi. Next month, the price of a smoothie will fall to $3 and the price of sushi will rise to $2 a piece.

Assume that Yangjie's preference map is:

1. Will Yangjie be able to buy 10 sm00thies and 20 pieces of sushi next month?
2. Will Yangjie want to buy 10 smoothies and 20 pieces of sushi? Explain why.
3. which situation does Yangjie prefer: smoothies at $5 each and sushi at $1 a piece or smoothies at $3 each and sushi at $2 a piece?
4. If Yangjie changes the quantities that she buys, which good will she buy more of ans which will she UK less of?
5. when the prices change next month, Will there be an income effect and a substitution effect at work or just one of them? Explain.

Price: $2.99

Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document