The price of gin has risen from $7 to $9 per bottle,the price of cocktail onions has fallen from $6 to $5 per jar,and Elizabeth's income has stayed fixed at $46 per week.Since the price changes,Elizabeth has been buying 4 bottles of gin and 2 jars of cocktail onions per week.At the original prices,4 bottles of gin and 2 jars of cocktail onions would have
A)exactly exhausted her income.
B)cost more than her income.
C)cost less than her income.
D)could have maximized her satisfaction given her budget constraint.

Question

Quizplus · Accepted Answer

At the original price, 4 bottles of gin would cost $28 and 2 jars of cocktail onions would cost $12, making a total of $40. Since Elizabeth's income is fixed at $46 per week, she would have $6 left over after buying the gin and onions.

After the price changes, 4 bottles of gin cost $36 (4 x $9) and 2 jars of cocktail onions cost $10 (2 x $5), making a total of $46. This means that Elizabeth is now spending all of her income on gin and onions, leaving her no money for anything else.

Therefore, the best choice for Elizabeth is option C - buying 4 bottles of gin and 2 jars of cocktail onions at the new prices for a total cost of $46. This is the option that costs less than her income, allowing her to still have some money left over for other expenses.

The Price of Gin Has Risen from $7 to $9