(Solution) - Ann lives in Princeton New Jersey and commutes by train -(2025 Original AI-Free Solution)

Paper Details

Ann 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.
a. Does the fact that her quantity of train travel is completely unresponsive to the price increase imply that Ann is not a rational consumer?
b. Explain why an increase in train travel might affect the amount she spends on restaurant meals.