Questions: George buys 2.5 pounds of hamburger and 2 pounds of chicken per week when hamburger costs 4 per pound and chicken costs 5 per pound. George buys 2.5 pounds of costs him 20 per week. What will happen if the price of hamburger drops to 2 per pound and the price of chicken increases to 7.50 per pound? [Note that George's original bundle has him as well off as before. A. George buys more hamburger and less chicken, and he is just as well off as before. B. George buys more hamburger and less chicken, and he is worse off. C. George buys more hamburger and less chicken, and he is better off. D. George buys the same amounts F. George buys less hamburger and more chicken, and he is worse off.

The answer is the first one (A): George buys more hamburger and less chicken, and he is just as well off as before.

Explanation for each option:

A. George buys more hamburger and less chicken, and he is just as well off as before.

• This option is correct. Given the price changes, George can adjust his consumption to maintain the same level of utility. With the price of hamburger dropping to $2 per pound and the price of chicken increasing to $7.50 per pound, George can buy more hamburger and less chicken to stay within his budget and maintain his satisfaction level.

B. George buys more hamburger and less chicken, and he is worse off.

• This option is incorrect. George can reallocate his spending to maintain his utility level. The price drop in hamburger allows him to buy more of it, and although chicken is more expensive, he can adjust his consumption to stay within his budget.

C. George buys more hamburger and less chicken, and he is better off.

• This option is incorrect. While George can buy more hamburger due to the price drop, the increase in the price of chicken means he has to buy less of it. The net effect on his well-being depends on his preferences, but the question states he is just as well off as before.

D. George buys the same amounts.

• This option is incorrect. Given the price changes, George will likely adjust his consumption to optimize his spending. He will not buy the same amounts because the relative prices of hamburger and chicken have changed.

F. George buys less hamburger and more chicken, and he is worse off.

• This option is incorrect. With the price of hamburger dropping and the price of chicken increasing, it is more likely that George will buy more hamburger and less chicken, not the other way around.

Summary: George will buy more hamburger and less chicken, and he will be just as well off as before, given the price changes and his ability to adjust his consumption to maintain his utility level.