If the price of a hot dog is $2, what is the optimal choice for Stewey? A B C D

Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
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Answer the given question with a proper explanation and step-by-step solution.

If the price of a hot dog is $2, what is the optimal choice for Stewey?

  1. A
  2. B
  3. C
  4. D
ate
N
Stewey has been taken to Coney Island on a pretty Saturday and given $20 to spend. Stewey will spend the money on
hot dogs and rides at the amusement park. The diagram below depicts two indifference curves for Stewey, as well as
two budget constraints based on two different prices for hot dogs. Use the diagram below to answer the following two
questions.
Hot Dogs
10
9
2
1
8
7 8 9 10
Rides
12. If Stewey's opportunity cost of a hot dog is two rides, what is the price of hot dogs?
a) $1
b) $4
c) $5
d) $10
Transcribed Image Text:ate N Stewey has been taken to Coney Island on a pretty Saturday and given $20 to spend. Stewey will spend the money on hot dogs and rides at the amusement park. The diagram below depicts two indifference curves for Stewey, as well as two budget constraints based on two different prices for hot dogs. Use the diagram below to answer the following two questions. Hot Dogs 10 9 2 1 8 7 8 9 10 Rides 12. If Stewey's opportunity cost of a hot dog is two rides, what is the price of hot dogs? a) $1 b) $4 c) $5 d) $10
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