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Microeconomics

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Moderate

Changes in Bundles After a Price Change

MICRO-4KME1Q

Suppose Ariel's utility depends on two goods: bacon and spinach (both in ounces). Currently, her marginal rate of substitution (MRS) is $\frac{MU_{bacon}}{MU_{spinach}}=0.75$. This morning the price of bacon changed to $\$4$ per ounce and the price of spinach remained at $\$3$ per ounce.

Which of the following is likely to happen to her consumption if her income is unchanged? Select ALL that apply.

A

She will consume more bacon.

B

She will consume less bacon.

C

She will consume more spinach.

D

She will consume less spinach.

E

Her consumption will remain the same.