Question
Now suppose with your help, Tintin has managed to maximize his utility by choosing the optimal consumption bundle. He has really enjoyed the dishes so
Now suppose with your help, Tintin has managed to maximize his utility by choosing the optimal consumption bundle. He has really enjoyed the dishes so he decides to go back to the same shop to buy his lunch the following day. His lunch budget is unchanged (i.e., 24 yuan). He finds the price of meatballs(X2) is also unchanged (i.e., 4 yuan) but the price of noodles (X1) has dropped from 3 yuan per serving to 2 yuan because the shop is offering a one-day "noodles discount".
As to be expected, his utility function remains the same as before, i.e., U = 6X1X2.
[Note, a consumer's preferences (represented by the utility function) are not likely to change overnight.]
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