Exhibit 6-30
-Consider Exhibit 6-30. Assume that you have $600 to spend on books and compact disks. What is the current price of compact disks?
A) $1
B) $5
C) $10
D) $60
E) unable to determine

Question

Exhibit 6-30 
-Consider Exhibit 6-30. Assume that you have $600 to spend on books and compact disks. What is the current price of compact disks?
A) $1 
B) $5 
C) $10 
D) $60 
E) unable to determine

Quizplus · Accepted Answer

To solve for the price of compact disks, we need to find the intersection of the budget constraint (BC) and the indifference curve (IC) that represents spending $600 on both books and CDs. Looking at the graph, the only point that satisfies this condition is at $10 for the price of CDs. Therefore, the current price of CDs is $10.

Exhibit 6-30 -Consider Exhibit 6-30. Assume That You Have $600 to Spend