Suppose Kevin has a weekly budget of $24 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $2 per bottle, and peanut butter is priced at $6 per jar. If Kevin spends his entire $24 on ranch dressing, he can buy jars of peanut butter. buy bottles of ranch dressing. If he spends his entire $24 on peanut butter, he can Use the blue line (circle symbol) to plot Kevin's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of ranch dressing and peanut butter that are affordable for Kevin. Finally, place the black point (plus symbol) on the point on Kevin's budget constraint that corresponds to a scenario in which Kevin spends $12 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 24 22 20 18 10 4 2 ° 02 4 8 8 10 12 14 16 18 20 22 24 RANCH DRESSING (Bottles) BC, ($24) Affordable Region + $12 on Each BC2($48) (?) What does the slope of Kevin's budget constraint represent? The opportunity cost of an additional bottle of ranch dressing in terms of jars of peanut butter The opportunity cost of an additional jar of peanut butter in terms of bottles of ranch dressing The cost of an additional jar of peanut butter in terms of dollars The cost of an additional bottle of ranch dressing in terms of dollars Suppose Kevin receives $24 from his relative and decides to commit this money to purchasing more ranch dressing and peanut butter. Using the green line (triangle symbol), draw Kevin's new budget constraint on the preceding graph. True or False: Kevin faces a new tradeoff between ranch dressing and peanut butter. 0 0 True False
Suppose Kevin has a weekly budget of $24 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $2 per bottle, and peanut butter is priced at $6 per jar. If Kevin spends his entire $24 on ranch dressing, he can buy jars of peanut butter. buy bottles of ranch dressing. If he spends his entire $24 on peanut butter, he can Use the blue line (circle symbol) to plot Kevin's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of ranch dressing and peanut butter that are affordable for Kevin. Finally, place the black point (plus symbol) on the point on Kevin's budget constraint that corresponds to a scenario in which Kevin spends $12 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 24 22 20 18 10 4 2 ° 02 4 8 8 10 12 14 16 18 20 22 24 RANCH DRESSING (Bottles) BC, ($24) Affordable Region + $12 on Each BC2($48) (?) What does the slope of Kevin's budget constraint represent? The opportunity cost of an additional bottle of ranch dressing in terms of jars of peanut butter The opportunity cost of an additional jar of peanut butter in terms of bottles of ranch dressing The cost of an additional jar of peanut butter in terms of dollars The cost of an additional bottle of ranch dressing in terms of dollars Suppose Kevin receives $24 from his relative and decides to commit this money to purchasing more ranch dressing and peanut butter. Using the green line (triangle symbol), draw Kevin's new budget constraint on the preceding graph. True or False: Kevin faces a new tradeoff between ranch dressing and peanut butter. 0 0 True False
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section6.A: Indifference Curve Analysis
Problem 1SQP
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Transcribed Image Text:Suppose Kevin has a weekly budget of $24 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $2 per bottle, and peanut butter
is priced at $6 per jar.
If Kevin spends his entire $24 on ranch dressing, he can buy
jars of peanut butter.
buy
bottles of ranch dressing. If he spends his entire $24 on peanut butter, he can
Use the blue line (circle symbol) to plot Kevin's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the
area that represents combinations of ranch dressing and peanut butter that are affordable for Kevin. Finally, place the black point (plus symbol) on
the point on Kevin's budget constraint that corresponds to a scenario in which Kevin spends $12 on each good.
Note: Dashed drop lines will automatically extend to both axes.
PEANUT BUTTER (Jars)
24
22
20
18
10
4
2
°
02
4
8 8 10 12 14 16 18
20 22 24
RANCH DRESSING (Bottles)
BC, ($24)
Affordable Region
+
$12 on Each
BC2($48)
(?)
What does the slope of Kevin's budget constraint represent?
The opportunity cost of an additional bottle of ranch dressing in terms of jars of peanut butter
The opportunity cost of an additional jar of peanut butter in terms of bottles of ranch dressing
The cost of an additional jar of peanut butter in terms of dollars
The cost of an additional bottle of ranch dressing in terms of dollars
Suppose Kevin receives $24 from his relative and decides to commit this money to purchasing more ranch dressing and peanut butter.
Using the green line (triangle symbol), draw Kevin's new budget constraint on the preceding graph.
True or False: Kevin faces a new tradeoff between ranch dressing and peanut butter.
0 0
True
False
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