Suppose Megan has a yearly budget of $240 to spend on juice and cereal. Juice is priced at $4 per gallon, and cereal is priced at $6 per box.If Megan spends her entire $240 on juice, she can buy60 gallons of juice. If she spends her entire $240 on cereal, she can buy40 boxesof cereal.Use the blue line (circle symbol) to plot Megan's budget constraint on the following graph. Next, use the orange point (square symbol) to shade thearea that represents combinations of juice and cereal that are affordable for Megan. Finally, place the black point (plus symbol) on the point onMegan's budget constraint that corresponds to a scenario in which Megan spends $120 on each good.Note: Dashed drop lines will automatically extend to both axes.120110100Вс, ($240)9080Affordable Region706050$120 on Each403020BC, ($360)10+102030405060708090100 110 120JUICE (Gallons)CEREAL (Boxes) What does the slope of Megan's budget constraint represent?The cost of an additional box of cereal in terms of dollarsThe cost of an additional gallon of juice in terms of dollarsThe opportunity cost of an additional box of cereal in terms of gallons of juiceThe opportunity cost of an additional gallon of juice in terms of boxes of cerealSuppose Megan receives $120 from her grandmother and decides to dedicate this money to buying more juice and cereal.Using the green line (triangle symbol), draw Megan's new budget constraint on the preceding graph.True or False: Megan faces a new tradeoff between juice and cereal.TrueFalse

We are going to use microeconomic concepts such as budget constraint, opportunity cost to answer…

What does the slope of Megan's budget constraint represent? The cost of an additional box of cereal in terms of dollars The cost of an additional gallon of juice in terms of dollars The opportunity cost of an additional box of cereal in terms of gallons of juice The opportunity cost of an additional gallon of juice in terms of boxes of cereal Suppose Megan receives $120 from her grandmother and decides to dedicate this money to buying more juice and cer Using the green line (triangle symbol), draw Megan's new budget constraint on the preceding graph. True or False: Megan faces a new tradeoff between juice and cereal. True False

What does the slope of Megan's budget constraint represent? The cost of an additional box of cereal in terms of dollars The cost of an additional gallon of juice in terms of dollars The opportunity cost of an additional box of cereal in terms of gallons of juice The opportunity cost of an additional gallon of juice in terms of boxes of cereal Suppose Megan receives $120 from her grandmother and decides to dedicate this money to buying more juice and cer Using the green line (triangle symbol), draw Megan's new budget constraint on the preceding graph. True or False: Megan faces a new tradeoff between juice and cereal. True False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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