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Budget Constraint

Last updated almost 3 years ago

5 questions

1

1

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You have a $50. You'd like to buy $10 ___'s. and a $2 ____'s.

Question 1

1.

What would the $10 be? $2?

Question 2

2.

You still have $50.

Create a schedule (another word to say table) of how much you could buy of each product. (Hint: label the columns "quantity of $10 item" and "quantity of $2 item.")

Question 3

3.

Create a line that represents the above relationship where the quantity of item 1 and quantity of item 2 are the axes units. (Hint: how much of just one item could you buy? How much of just the other could you buy? Hint 2: Could you plot these points on the axes intercepts?)

Question 4

4.

Question 5

5.

Let's critique this idea of budget constraints. What's one big assumption of this idea of budget constraints?

In this scenario, what’s the opportunity cost of choosing to buy just one of the $10 items?

Five of the $2 items.

One of the $5 items.

One of the $10 items.