Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 4

Monica always buys one unit of food together with three units of housing, no matter what the prices of these two goods. If food and housing start with equal prices, decide whether the following events would make her better off or worse off or leave her welfare unchanged.
a. The prices of food and housing increase by 50 percent, with Monica's income unchanged.
b. The prices of food and housing increase by 50 percent, and Monica's income increases by 50 percent.
c. The price of food increases by 50 percent, the price of housing remains unchanged, and Monica's income increases by 25 percent.
d. The price of food remains unchanged, the price of housing increases by 50 percent, and Monica's income increases by 25 percent.
e. How might your answers to part c and part d change if Monica were willing to alter her mix of food and housing in response to price changes?