A consumer's budget constraint is given by 500 = 40G + 10D, where G is ice cream in liters and D is drink in liters. The consumer thinks that a liter of ice cream is a perfect substitute for 3 liters of drink. Which statements are then correct? Select one or more options: a-2 liters of ice cream and 42 liters of drink are on the budget line b-The optimal choice is to consume 3 times as much drink as ice cream c-The optimal choice is to only consume ice cream d-0 liters of ice cream and 50 liters of drink are on the budget line
A consumer's budget constraint is given by 500 = 40G + 10D, where G is ice cream in liters and D is drink in liters. The consumer thinks that a liter of ice cream is a perfect substitute for 3 liters of drink. Which statements are then correct? Select one or more options: a-2 liters of ice cream and 42 liters of drink are on the budget line b-The optimal choice is to consume 3 times as much drink as ice cream c-The optimal choice is to only consume ice cream d-0 liters of ice cream and 50 liters of drink are on the budget line
Chapter5: Income And Substitution Effects
Section: Chapter Questions
Problem 5.1P
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consumption
A consumer's budget constraint is given by 500 = 40G + 10D, where G is ice cream in liters and D is drink in liters. The consumer thinks that a liter of ice cream is a perfect substitute for 3 liters of drink. Which statements are then correct?
Select one or more options:
a-2 liters of ice cream and 42 liters of drink are on the budget line
b-The optimal choice is to consume 3 times as much drink as ice cream
c-The optimal choice is to only consume ice cream
d-0 liters of ice cream and 50 liters of drink are on the budget line
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