-Suppose Sam plans to buy only popcorn and soda. He has $40 to spend per week. A change in which of the following variables will change Sam's consumption possibilities? I. price of popcorn
II) income
III) preferences
IV) utility
A) II only
B) I and II
C) I, II and III
D) III and IV

Question

-Suppose Sam plans to buy only popcorn and soda. He has $40 to spend per week. A change in which of the following variables will change Sam's consumption possibilities? I. price of popcorn
II) income
III) preferences
IV) utility
A) II only 
B) I and II 
C) I, II and III 
D) III and IV

Quizplus · Accepted Answer

A change in the price of popcorn or Sam's income will directly affect his budget constraint and thus his consumption possibilities. Preferences and utility do not directly change the budget constraint.

-Suppose Sam Plans to Buy Only Popcorn and Soda