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Llanis Llanis
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6 years ago
Joe subscribes to an Internet provider that charges $2 per hour. He has $100 per month to spend and is at equilibrium by buying 10 hours of Internet access and $80 worth of other goods. Draw the indifference curve-budget line. If the company switches to a $20 monthly fee for unlimited Internet access, is Joe better off?
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Microeconomics

Microeconomics


Edition: 6th
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#1
6 years ago
See the above figure. Under the new plan Joe can still purchase his original bundle and get additional time on the Internet for free. Note that had Joe been consuming less than 10 hours at $2 per hour, the new pricing policy would leave him worse off.
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