In the diagram, an individual first selects combination N on budget line LM. If his money income rises and the price of good Y also rises, his budget line moves to RS, after which he selects combination T. What happens to his economic welfare?
- AHe is definitely better off because his money income has increased.
- BHe is definitely worse off because he has to pay more for good Y.
- CHe is better off since combination T, which he now chooses, was not previously available to him.
- DHe is worse off since combinations of X and Y along LN are no longer available to him.