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Suppose Lorenzo has a weekly budget of $48 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $4 per bottle, and peanut cutter is priced at $6 per jar. Lorenzo spends his entire $48 on ranch dressing, he can buy jars of peanut butter. suy Ise the blue line (circle symbol) to plot Lorenzo's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the rea that represents combinations of ranch dressing and peanut butter that are affordable for Lorenzo. Finally, place the black point (plus symbol) on he point on Lorenzo's budget constraint that corresponds to a scenario in which Lorenzo spends $24 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 22 20 18 16 14 12 8 2 0 0 bottles of ranch dressing. If he spends his entire $48 on peanut butter, he can 8 10 12 14 16 18 20 22 RANCH DRESSING (Bottles) BC, ($48) O O True Affordable Region O False $24 on Each What does the slope of Lorenzo's budget constraint represent? O 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 O The opportunity cost of an additional bottle of ranch dressing in terms of jars of peanut butter O The opportunity cost of an additional jar of peanut butter in terms of bottles of ranch dressing BC ($72) Suppose Lorenzo receives $24 from his relative and decides to commit this money to purchasing more ranch dressing and peanut butter. Ising the green line (triangle symbol), draw Lorenzo's new budget constraint on the preceding graph. rue or False: Lorenzo faces the same tradeoff between ranch dressing and peanut butter.

Suppose Lorenzo has a weekly budget of $48 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $4 per bottle, and peanut cutter is priced at $6 per jar. Lorenzo spends his entire $48 on ranch dressing, he can buy jars of peanut butter. suy Ise the blue line (circle symbol) to plot Lorenzo's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the rea that represents combinations of ranch dressing and peanut butter that are affordable for Lorenzo. Finally, place the black point (plus symbol) on he point on Lorenzo's budget constraint that corresponds to a scenario in which Lorenzo spends $24 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 22 20 18 16 14 12 8 2 0 0 bottles of ranch dressing. If he spends his entire $48 on peanut butter, he can 8 10 12 14 16 18 20 22 RANCH DRESSING (Bottles) BC, ($48) O O True Affordable Region O False $24 on Each What does the slope of Lorenzo's budget constraint represent? O 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 O The opportunity cost of an additional bottle of ranch dressing in terms of jars of peanut butter O The opportunity cost of an additional jar of peanut butter in terms of bottles of ranch dressing BC ($72) Suppose Lorenzo receives $24 from his relative and decides to commit this money to purchasing more ranch dressing and peanut butter. Ising the green line (triangle symbol), draw Lorenzo's new budget constraint on the preceding graph. rue or False: Lorenzo faces the same tradeoff between ranch dressing and peanut butter.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose Lorenzo has a weekly budget of $48 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $4 per bottle, and peanut butter is priced at $6 per jar. If Lorenzo spends his entire $48 on ranch dressing, he can buy **12** bottles of ranch dressing. If he spends his entire $48 on peanut butter, he can buy **8** jars of peanut butter. Use the blue line (circle symbol) to plot Lorenzo'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 Lorenzo. Finally, place the black point (plus symbol) on the point on Lorenzo’s budget constraint that corresponds to a scenario in which Lorenzo spends $24 on each good. **Graph Description**: - **Horizontal Axis (RANCH DRESSING)**: Ranges from 0 to 24 bottles. - **Vertical Axis (PEANUT BUTTER)**: Ranges from 0 to 24 jars. - **Blue Line (BC₁($48))**: Indicates Lorenzo's initial budget constraint, showing combinations of ranch dressing and peanut butter totaling $48. - **Orange Area (Affordable Region)**: Represents combinations within budget. - **Black Point ($24 on Each)**: Represents Lorenzo spending $24 on both goods. - **Green Line (BC₂($72))**: Represents the new budget constraint if Lorenzo has $72. **Question**: What does the slope of Lorenzo’s budget constraint represent? - 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 - 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 Suppose Lorenzo 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 Lorenzo’s new budget constraint on the preceding graph. **True or False**: Lorenzo faces the same tradeoff between ranch dressing and peanut butter. - True - False
Transcribed Image Text:Suppose Lorenzo has a weekly budget of $48 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $4 per bottle, and peanut butter is priced at $6 per jar. If Lorenzo spends his entire $48 on ranch dressing, he can buy **12** bottles of ranch dressing. If he spends his entire $48 on peanut butter, he can buy **8** jars of peanut butter. Use the blue line (circle symbol) to plot Lorenzo'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 Lorenzo. Finally, place the black point (plus symbol) on the point on Lorenzo’s budget constraint that corresponds to a scenario in which Lorenzo spends $24 on each good. **Graph Description**: - **Horizontal Axis (RANCH DRESSING)**: Ranges from 0 to 24 bottles. - **Vertical Axis (PEANUT BUTTER)**: Ranges from 0 to 24 jars. - **Blue Line (BC₁($48))**: Indicates Lorenzo's initial budget constraint, showing combinations of ranch dressing and peanut butter totaling $48. - **Orange Area (Affordable Region)**: Represents combinations within budget. - **Black Point ($24 on Each)**: Represents Lorenzo spending $24 on both goods. - **Green Line (BC₂($72))**: Represents the new budget constraint if Lorenzo has $72. **Question**: What does the slope of Lorenzo’s budget constraint represent? - 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 - 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 Suppose Lorenzo 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 Lorenzo’s new budget constraint on the preceding graph. **True or False**: Lorenzo faces the same tradeoff between ranch dressing and peanut butter. - True - False
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