A consumer has income of $15,000. Pillows costs $35 per pillow, and soda costs $70 per bottle.   Under what circumstance(s) if any can an increase in the price of pillows induce a consumer to buy more of that good? Explain. Explain how a consumer should allocate expenditure in order to achieve maximum satisfaction and analyse how a rise in income might affect that allocation.

Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
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A consumer has income of $15,000. Pillows costs $35 per pillow, and soda costs $70 per bottle.

 

  1. Under what circumstance(s) if any can an increase in the price of pillows induce a consumer to buy more of that good? Explain.
  2. Explain how a consumer should allocate expenditure in order to achieve maximum satisfaction and analyse how a rise in income might affect that allocation. 
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