-Refer to Figure 6-5. Suppose the price of Pilates sessions rises to $30 while income and the price of Yoga sessions remain unchanged. What is her new optimal bundle?

Question

Quizplus · Accepted Answer

When the price of Pilates sessions increases, the consumer's budget constraint changes, making the previous optimal bundle (A) no longer affordable or optimal. The new optimal bundle will be where the consumer maximizes utility given the new prices, which is likely at bundle C, assuming it lies on the new budget line and provides the highest utility.