Miley Cyrus, under the conditions of a court order, is required to enroll in the Summer session at Kardashian College. She is granted $50 a week to spend: either on energy drinks at $2.25 each or on gasoline for her Bentley at $3.00 per gallon. a.) Draw Miley’s opportunity set. Label her feasible set. (Put gasoline on the horizontal axis.) (Suggestion: Draw a sufficiently large diagram as you will add more items to the same graph in subsequent parts.) b.) In part a), what is the trade-off (opportunity cost) of energy drinks in terms of gasoline? c.) In the graph for part a) above, now draw each new budget constraint she would face if: The price of energy drinks fell to $2, ceteris paribus; The price of gasoline rose to $3.50 per gallon, ceteris paribus; d) In each case of part c), how does the trade-off (opportunity cost) of energy drinks in terms of gasoline
Miley Cyrus, under the conditions of a court order, is required to enroll in the Summer session at Kardashian College. She is granted $50 a week to spend: either on energy drinks at $2.25 each or on gasoline for her Bentley at $3.00 per gallon. a.) Draw Miley’s opportunity set. Label her feasible set. (Put gasoline on the horizontal axis.) (Suggestion: Draw a sufficiently large diagram as you will add more items to the same graph in subsequent parts.) b.) In part a), what is the trade-off (opportunity cost) of energy drinks in terms of gasoline? c.) In the graph for part a) above, now draw each new budget constraint she would face if: The price of energy drinks fell to $2, ceteris paribus; The price of gasoline rose to $3.50 per gallon, ceteris paribus; d) In each case of part c), how does the trade-off (opportunity cost) of energy drinks in terms of gasoline
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Miley Cyrus, under the conditions of a court order, is required to enroll in the Summer session at Kardashian College. She is granted $50 a week to spend: either on energy drinks at $2.25 each or on gasoline for her Bentley at $3.00 per gallon.
a.) Draw Miley’s opportunity set. Label her feasible set. (Put gasoline on the horizontal axis.)
(Suggestion: Draw a sufficiently large diagram as you will add more items to the same graph in subsequent parts.)
b.) In part a), what is the trade-off (
c.) In the graph for part a) above, now draw each new budget constraint she would face if:
-
- The price of energy drinks fell to $2, ceteris paribus;
- The price of gasoline rose to $3.50 per gallon, ceteris paribus;
d) In each case of part c), how does the trade-off (opportunity cost) of energy drinks in terms of gasoline
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