Chapter 1

Utility is held constant when C*F = 17.5*7=122.5. The consumer is on the new budget line when C/F =3. Combining yields F= 6.39 and C = 19.17. At the new prices, this requires an income of 76.68 and a resulting cost of living index of 76.68/70 = 1.095. Diff: 2. Topic: Cost-of-Living Adjustments. Figure 5.10 ................
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