Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1
-Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hot dog is $2.00. Tom's monthly income is
A) $40.
B) $60.
C) $80.
D) $100.

Question

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow.  Figure 6.1
-Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hot dog is $2.00. Tom's monthly income is
A) $40. 
B) $60. 
C) $80. 
D) $100.

Quizplus · Accepted Answer

Tom's monthly income is determined by the budget constraint line AC. Given that the price of a hot dog is $2.00, and assuming the graph shows that at point A, Tom can afford 40 hot dogs (without buying any hamburgers), his total expenditure on hot dogs alone would be 40 hot dogs * $2.00/hot dog = $80. Thus, Tom's monthly income is $80.

Refer to the Information Provided in Figure 6