Murphy used to consume 100 units of X and 50 units of Y when the price of X was $2 and the price of Y was $4.If the price of X rose to $3 and the price of Y rose to $8, how much would Murphy's income have to rise so that he could still afford his original bundle?
A)$750
B)$250
C)$300
D)$500
E)None of the above.

Question

Quizplus · Accepted Answer

Murphy's original expenditure was (100*$2)+(50*$4) = $300.

Now, the new prices give us the following expenditure for the original bundle: (100*$3)+(50*$8) = $700.

So, Murphy's new income needs to be $700-$300 = $400 more than his original income.

Therefore, the correct answer is option C, $300.

Murphy Used to Consume 100 Units of X and 50