Suppose the price of pizza is $10, the price of cola is $1, and the consumer's income is $60. In addition, suppose the consumer's budget constraint measures pizza on the horizontal axis and cola on the vertical axis. Refer to Scenario#1. If the price of cola doubles to $2 while both the price of pizza is constant at $10 and the income is constant at $60, then the slope of the budget constraint rises to -5/2 budget constraint intersects the horizontal axis 5 pizzas budget constraint intersects the vertical axis 30 colas budget constraint intersects the horizontal axis at 25 pizzas

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Suppose the price of pizza is $10, the price of cola is $1, and the consumer's income is $60. In addition,
suppose the consumer's budget constraint measures pizza on the horizontal axis and cola on the vertical axis.
Refer to Scenario#1. If the price of cola doubles to $2 while both the price of pizza is constant at $10 and the
income is constant at $60, then the
slope of the budget constraint rises to -5/2
budget constraint intersects the horizontal axis 5 pizzas
budget constraint intersects the vertical axis 30 colas
budget constraint intersects the horizontal axis at 25 pizzas
Transcribed Image Text:Suppose the price of pizza is $10, the price of cola is $1, and the consumer's income is $60. In addition, suppose the consumer's budget constraint measures pizza on the horizontal axis and cola on the vertical axis. Refer to Scenario#1. If the price of cola doubles to $2 while both the price of pizza is constant at $10 and the income is constant at $60, then the slope of the budget constraint rises to -5/2 budget constraint intersects the horizontal axis 5 pizzas budget constraint intersects the vertical axis 30 colas budget constraint intersects the horizontal axis at 25 pizzas
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