Figure 10-10

-Refer to Figure 10-10.If the consumer has $240 to spend on DVDs and CDs, what is the price of a DVD if the budget constraint is BC₁?
A)$10
B)$20
C)$24
D)$40

Question

Figure 10-10
 
-Refer to Figure 10-10.If the consumer has $240 to spend on DVDs and CDs, what is the price of a DVD if the budget constraint is BC₁?
A)$10 
B)$20 
C)$24 
D)$40

Quizplus · Accepted Answer

The budget constraint BC₁ represents the combinations of DVDs and CDs the consumer can purchase with $240. If the consumer spends all $240 on DVDs, the number of DVDs purchased is the total budget divided by the price of a DVD. If BC₁ allows for 12 DVDs, then $240/12 DVDs = $20 per DVD.

Figure 10-10 -Refer to Figure 10-10.If the Consumer Has $240 to Spend