Suppose the only two goods that Charlie consumes are wine and cheese. When wine sells for $10 a bottle and cheese sell for $10 a pound, he buys 6 bottles of wine and 4 pounds of cheese - spending his entire income of $100. One day the price of wine falls to $5 a bottle and the price of cheese increases to $20 a pound, while his income does not change. The bundle of wine and cheese that he purchased at the old prices now costs
A)the same amount at the new prices.
B)less than Charlie's income at the new prices.
C)more than Charlie's income at the new prices.
D)We do not have enough information to answer the question.

Question

Quizplus · Accepted Answer

At the new prices, 6 bottles of wine cost $30 and 4 pounds of cheese cost $80, totaling $110, which is more than Charlie's income of $100.

Suppose the Only Two Goods That Charlie Consumes Are Wine