Question
1)why it is false? When digital music cost $1 per song and digital movie rentals cost $4 each, an individual chose to purchase 9 songs
1)why it is false?
When digital music cost $1 per song and digital movie rentals cost $4 each, an individual chose to purchase 9 songs and rent 4 movies per month. When the price of digital music increases to $1.25 per song, that individual now chooses to purchase 4 songs and rent 5 movies per month.Because their consumption of one good has increased and their consumption of the other good has decreased, this individual's utility could be either higher or lower than it was before the price increase.[Hint: If you're having trouble with this question, a graph showing the original situation and the new situation might be helpful.]
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