Question

ishana lives in princeton, new jersey, and commutes by train each day to her job in new york city (20 round trips per month). when the price of a round trip goes up from $10 to $20, she responds by consuming exactly the same number of trips as before, while spending $200 per month less on restaurant meals. does the fact that her quantity of train travel is completely unresponsive to the price increase imply that ishana is not a rational consumer? no yes

Explanation:

A rational consumer maximizes utility subject to a budget - constraint. Ishana may consider train travel a necessity for work. By reducing spending on restaurant meals (a non - necessity), she reallocates her budget to maintain train travel quantity. This shows she is making a rational choice to balance her preferences and budget.

Answer:

No