Jones spends all of his income on two goods. The prices and quantities consumed last year are as follows: PX = 2, X = 50, PY = 10, and Y = 10.
a. Assume that his preferences do not change and they are normal shaped indifference curves. Suppose prices for next year are PX = 3 and PY = 5 and income equals $180. Is he better off, worse off, or indifferent next year? Explain by graphing two examples.