In the Challenge Solution, suppose that housing was relatively less expensive and food was relatively more expensive
Question:
In the Challenge Solution, suppose that housing was relatively less expensive and food was relatively more expensive in London than in Seattle, so that the LL budget line cuts the LS budget line from below rather than from above as in the Challenge Solution’s figure. Show that the conclusion that Alexx is better off after his move still holds. Explain the logic behind the following statement: “The analysis holds as long as the relative prices differ in the two cities. Whether one price or the other is relatively higher in London than in Seattle is irrelevant to the analysis.”
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Microeconomics Theory And Applications With Calculus
ISBN: 978-0134167381
4th Edition
Authors: Jeffrey M. Perloff
Question Posted: