Figure 5-1 shows the preferences of a consumer for food and other goods.He is initially in equilibrium at point A where the budget line MN is tangent to the indifference curve.
Figure 5-1
-In Figure 5-1,the total outlay on other goods before the excise subsidy is given by _____.
A)0M
B)0N
C)0E
D)0G

Question

Figure 5-1 shows the preferences of a consumer for food and other goods.He is initially in equilibrium at point A where the budget line MN is tangent to the indifference curve.
Figure 5-1 
-In Figure 5-1,the total outlay on other goods before the excise subsidy is given by _____.
A)0M 
B)0N 
C)0E 
D)0G

Quizplus · Accepted Answer

The total outlay on other goods before the excise subsidy is given by 0E, which is the vertical distance between the demand curve and the horizontal axis at the pre-subsidy equilibrium quantity.

Figure 5-1 Shows the Preferences of a Consumer for Food