1 How could the receipt of new information about health impl

1. How could the receipt of new information about health implications of foods, alcohol, and tobacco affect a consumer optimum?

2. Other things being equal would a consumer optimum change if the prices of all items consumed rise an identical rate? Explain

Solution

Usualy consumers general behaviour is optimising his utility they will allocate their consumption such a way that their utility will be maaximum. In this case if peoples utility from time is higher than utility from food, alchohol and tobacco they will reduce consumption. But that doesnot mean they are not consuming in optimum level it can be said that they are keeping their part of income for future use or allocating in other goods.

Yes that will affect their optimum level if income doesnot change in equal proportion. If income also changes in same proportion that will reduce the utility for per unit money so optimum level will remain same only value of money will decrease.