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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

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 1PA
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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 buy 60 gallons of juice. If she spends her entire $240 on cereal, she can buy 40 boxes of 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 the area that represents combinations of juice and cereal that are affordable for Megan. Finally, place the black point (plus symbol) on the point on Megan'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. 120 110 100 Вс, ($240) 90 80 Affordable Region 70 60 50 $120 on Each 40 30 20 BC, ($360) 10 + 10 20 30 40 50 60 70 80 90 100 110 120 JUICE (Gallons) CEREAL (Boxes)
Transcribed Image Text: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 buy 60 gallons of juice. If she spends her entire $240 on cereal, she can buy 40 boxes of 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 the area that represents combinations of juice and cereal that are affordable for Megan. Finally, place the black point (plus symbol) on the point on Megan'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. 120 110 100 Вс, ($240) 90 80 Affordable Region 70 60 50 $120 on Each 40 30 20 BC, ($360) 10 + 10 20 30 40 50 60 70 80 90 100 110 120 JUICE (Gallons) CEREAL (Boxes)
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 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. True False
Transcribed Image Text: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 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. True False
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