Twenty years ago, Amanda consumed cans of motor oil which cost her 6 pesos each and gallons of gasoline which cost her 14 pesos each.With her income of 112 pesos, she bought 7 cans of motor oil and 5 gallons of gasoline.Today she has an income of 230 pesos.Cans of motor oil now cost 10 pesos each and gallons of gasoline now cost 32 pesos each.Assuming her preferences haven't changed, she

A) is definitely better off than she was 20 years ago.
B) was definitely better off 20 years ago than she is now.
C) is just as well off as she was 20 years ago.
D) may be either better or worse off now than 20 years ago.There is not enough information to determine which is the case.
E) is behaving irrationally.

To determine whether Amanda is better or worse off now compared to 20 years ago, we need to compare her purchasing power relative to her preferences for motor oil and gasoline. Twenty years ago, she spent $7\times 6=42$ pesos on motor oil and $5\times 14=70$ pesos on gasoline, for a total of 112 pesos. Today, the same quantities would cost $7\times 10=70$ pesos for motor oil and $5\times 32=160$ pesos for gasoline, totaling 230 pesos. Although her income has increased to match the exact cost of her previous consumption at today's prices, we cannot definitively say she is better or worse off without knowing how the utility she derives from these goods and other goods or services she might consume has changed, or how the prices of other goods and services have changed relative to her income. Therefore, there is not enough information to determine her relative well-being.