Jessica's preferences for peanut butter and jelly are represented by the utility function U(p, j)= min{2p, 5j}.If prices and income change, but her old consumption bundle lies somewhere on her new budget line, she will not change her consumption.

Question

Quizplus · Accepted Answer

If Jessica's old consumption bundle lies somewhere on the new budget line, it means that she can still afford to buy the same combination of peanut butter and jelly as before. Since her preferences are represented by a utility function, she will continue to consume the same combination to maximize her utility. Therefore, she will not change her consumption.

Jessica's Preferences for Peanut Butter and Jelly Are Represented by the Utility