Justin has a part-time job and earns $50 per week. He spends his entire income on two goods: Hamburgers (which cost $2 each) and movie rentals (which cost $3 each). Draw Justin's budget constraint
Suppose that Justin decides to purchase 10 hamburgers and rent 10 movies this week. Is this choice within Justin's opportunity set? Show this choice on your graph.
Yes, Justin is able to purchase 10 hamburgers and rent 10 movies. That is one point on his budget constraint.
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What do trade policies do to the standard of living?
For a commitment strategy to work:
A. the punishment must occur immediately after the game is played. B. the punishment must be so bad that it outweighs the incentive to defect in the game. C. no player may have a dominant strategy. D. both players must agree to a punishment.
Consider a used car market in which half the cars are good and half are bad (lemons). Suppose the average price of a good car is $9,000 and the average price of a lemon is $3,000. If rational buyers are willing to pay $6,000 for a used car, then sellers
will agree to sell mostly lemons at this price. What is the term used to describe this situation? A) moral hazard B) adverse selection C) an efficient market D) economic irrationality
The difference between the exports and imports of goods in a country is referred to as the
A. balance of payments. B. exchange rate. C. balance of trade. D. balance of power.