If the price of good X goes up and the price of good Y goes down,then it is possible for
A) The person is better off than before.
B) The person is worse off than before.
C) The person is no better or worse off than before.
D) All of the above are possible.

Question

Quizplus · Accepted Answer

It is possible that the person prefers good X to good Y and therefore, they may be worse off if the increase in the price of X is greater than the decrease in the price of Y. On the other hand, it is possible that the person prefers good Y to good X and therefore, they may be better off if the decrease in the price of Y is greater than the increase in the price of X. Finally, it is also possible that the person has no preference between the two goods and therefore, their overall welfare remains unchanged. Hence, all of the above possibilities are possible.

If the Price of Good X Goes Up and the Price