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Scenario: Tom's Budget Constraint
Tom is trying to decide how to allocate his $50 budget for music downloads and online movie streaming when the price of a music download is $1 and the price of a movie is $5.
-(Scenario: Tom's Budget Constraint)Use Scenario: Tom's Budget Constraint.The combination of _____ music downloads and _____ movies lies INSIDE Tom's budget line (meaning Tom can afford this combination,but he will not be spending the entire $50).
A) 50;10
B) 50;0
C) 0;5
D) 100;5

Question

Quizplus · Accepted Answer

According to the scenario, the price of a movie is $5, and Tom's budget is $50. So, Tom can buy a maximum of 50/5=10 movies with his budget. Similarly, he can buy 50/1=50 music downloads with his budget. The budget line equation is given by: 
5M + D = 50 
Where M is the number of movies and D is the number of music downloads. 
If Tom buys 0 movies and 5 music downloads, then the budget line equation will be:
5(0) + 1(5) = 5
Which means Tom will spend 5 out of his $50 budget. Therefore, the combination of 0 movies and 5 music downloads lies inside Tom's budget line. It is the best choice as he will not spend his entire budget and still get to enjoy some music downloads.

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