Suppose Kate has a weekly budget of $24 to spend on seltzer water and peanut butter. Seltzer water is priced at $2 per case, and peanut butter is priced at $6 per jar. If Kate spends her entire $24 on seltzer water, she can buy [ jars of peanut butter. cases of seltzer water. If she spends her entire $24 on peanut butter, she can buy Use the blue line (circle symbol) to plot Kate's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of seltzer water and peanut butter that are affordable for Kate. Finally, place the black point (plus symbol) on the point on Kate's budget constraint that corresponds to a scenario in which Kate spends $12 on each good.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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What does the slope of Kate's budget constraint represent?
The cost of an additional jar of peanut butter in terms of dollars
The cost of an additional case of seltzer water in terms of dollars
The opportunity cost of an additional case of seltzer water in terms of jars of peanut butter
The opportunity cost of an additional jar of peanut butter in terms of cases of seltzer water
Suppose Kate receives $24 from her relative and decides to commit this money to purchasing more seltzer water and peanut butter.
Using the green line (triangle symbol), draw Kate's new budget constraint on the preceding graph.
True or False: Kate faces the same tradeoff between seltzer water and peanut butter.
True
False
Transcribed Image Text:What does the slope of Kate's budget constraint represent? The cost of an additional jar of peanut butter in terms of dollars The cost of an additional case of seltzer water in terms of dollars The opportunity cost of an additional case of seltzer water in terms of jars of peanut butter The opportunity cost of an additional jar of peanut butter in terms of cases of seltzer water Suppose Kate receives $24 from her relative and decides to commit this money to purchasing more seltzer water and peanut butter. Using the green line (triangle symbol), draw Kate's new budget constraint on the preceding graph. True or False: Kate faces the same tradeoff between seltzer water and peanut butter. True False
Suppose Kate has a weekly budget of $24 to spend on seltzer water and peanut butter. Seltzer water is priced at $2 per case, and peanut butter is
priced at $6 per jar.
If Kate spends her entire $24 on seltzer water, she can buy
jars of peanut butter.
Use the blue line (circle symbol) to plot Kate's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area
that represents combinations of seltzer water and peanut butter that are affordable for Kate. Finally, place the black point (plus symbol) on the point
on Kate's budget constraint that corresponds to a scenario in which Kate spends $12 on each good.
Note: Dashed drop lines will automatically extend to both axes.
PEANUT BUTTER (Jars)
24
22
20
18
16
14
10
4
2
0
0
+
2
+
6 8 10 12 14 16
SELTZER WATER (Cases)
18
cases of seltzer water. If she spends her entire $24 on peanut butter, she can buy
20 22 24
O
BC, ($24)
0
Affordable Region
+
$12 on Each
BC₂ ($48)
(?)
Transcribed Image Text:Suppose Kate has a weekly budget of $24 to spend on seltzer water and peanut butter. Seltzer water is priced at $2 per case, and peanut butter is priced at $6 per jar. If Kate spends her entire $24 on seltzer water, she can buy jars of peanut butter. Use the blue line (circle symbol) to plot Kate's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of seltzer water and peanut butter that are affordable for Kate. Finally, place the black point (plus symbol) on the point on Kate's budget constraint that corresponds to a scenario in which Kate spends $12 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 24 22 20 18 16 14 10 4 2 0 0 + 2 + 6 8 10 12 14 16 SELTZER WATER (Cases) 18 cases of seltzer water. If she spends her entire $24 on peanut butter, she can buy 20 22 24 O BC, ($24) 0 Affordable Region + $12 on Each BC₂ ($48) (?)
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