Problem 1:
Juanita consumes only two products and has an income of $100. Suppose the price of good 1 is $10 per unit and the price of good 2 is $20 per unit. Now, for reasons of inflation caused by the post-pandemic and the war between Russia and Ukraine, the price of good 1 increases to $20 per unit, while the price of good 2 increases to $25 per unit. On the other hand, the consumer also gets an increase in income of $100 (so his new income is $200).
Does this situation make you better or worse? foundation