Assume the graph shown represents Dana's budget constraint. If Dana's income to spend on these two items decreased, which of the following could be said?
A. Dana will derive more utility from each item, because she values each one more now that she's poorer.
B. Dana will be able to buy less of both goods.
C. Dana will buy more hairbands now because they are relatively less expensive.
D. All of these are true.
Answer: B
You might also like to view...
Veruca sells therapeutic bath salts on the Internet. Her annual revenue is $52,000 per year, the explicit costs of her business are $14,000, and the opportunity costs of her business are $17,000 per year. What is her accounting profit?
A) $14,000 B) $21,000 C) $31,000 D) $38,000
College education provides higher income for the individual but also a more productive and more educated person who will contribute to society in many ways. Higher education is an example of:
A. a nonexcludable service. B. a negative externality. C. adverse selection. D. a positive externality.
Figure 8.3 shows a firm's marginal cost, average total cost, and average variable cost curves. At Q = 50, the average fixed cost is:
A. $30. B. $40. C. $50. D. $60.
The opportunity cost of attending college might best be described as
A. the lowest-valued alternative use of the student's time. B. the value that the student attaches to not working. C. the highest-valued alternative use of the student's time. D. the money that must be paid in order to attend college.