Suppose a consumer can spend $1,000 on food and clothing. The price of food is $5 per unit and the price of clothing is $20 per unit. Also suppose the consumer was consuming 100 units of food and 25 units of clothing, and then the price of food rose to $10. Which of the following statements is true?
A) The maximum amount of food the consumer can buy is 100 units.
B) The maximum amount of clothing the consumer can buy is 25 units.
C) The maximum amount of food the consumer can buy is 50 units.
D) If the consumer does not reduce food consumption, clothing consumption can be 12.5 units, at best.
E) The consumer can consume 50 units of clothing.
Correct Answer:
Verified
Q45: Economists generally assume that a consumer
A)consumes until
Q46: An increase in income
A)causes a change in
Q47: Which of the following represents the substitution
Q48: The budget constraint
A)is the combined price of
Q49: The income effect of an increase in
Q51: Which of the following statements is true
Q52: The budget constraint
A)is the lower limit on
Q53: The budget constraint is the set of
Q54: An increase in the income of a
Q55: Suppose Isabella has $20 to spend on
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents