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Microeconomics

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Choosing between Restrictions

MICRO-KQMXET

Suppose that, when the price of a book is \$5, the price of a bag of potato chips is \$2, and your income is \$184, your optimal bundle is 30 books and 17 potato chips bags. An anti-genie (a rather unpopular character, who instead of granting you three wishes makes you choose between three undesirable options) gives you the choices below.

What would you, a rational, utility-maximizing individual, prefer?

A

To have the genie take 2 books and 5 bags of chips from you.

B

To have the genie take away 10 bags of chips from you.

C

To have your income decreased by \$20.

D

It is impossible to determine which choice is better without knowing the form of your utility function.