Say Anna chooses between partying and studying. Supposed her indifference curves satisfied all the assumptions about consumer theory, but she also liked studying a lot more than partying. If the price of studying increased, then Anna would consume
A)more studying and less partying.
B)less studying and more partying.
C)the same as before.
D)no partying at all, in order to consumer more studying.

Question

Quizplus · Accepted Answer

Since Anna likes studying more than partying, studying is likely on a higher indifference curve than partying. When the price of studying increases, it becomes more expensive for Anna to consume studying, which makes it relatively less desirable compared to partying. As a result, she would consume less studying and more partying, moving to a point on a lower indifference curve where the marginal rate of substitution between studying and partying is lower.

Say Anna Chooses Between Partying and Studying