Suppose the Only Two Goods That Brett Consumes Are Wine

question 226

Multiple Choice

Suppose the only two goods that Brett consumes are wine and cheese.When wine sells for $10 a bottle and cheese sell for $10 a pound,he buys 6 bottles of wine and 4 pounds of cheese - spending his entire income of $100.One day the price of wine falls to $5 a bottle,and the price of cheese increases to $20 a pound,while his income does not change.If you illustrate wine on the vertical axis and cheese on the horizontal axis,then

• A) the slope of Brett's budget has not changed.
• B) the slope of Brett's budget constraint is flatter at the new prices.
• C) the slope of Brett's budget constraint is steeper at the new prices.
• D) Brett's budget constraint has shifted in a parallel fashion to the budget constraint with the old prices.

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Definitions:

Percent

A proportion or share in a whole, expressed as a fraction of 100.

Percentage Less

The reduced amount expressed as a fraction of a hundred.

Sales

The exchange of goods or services for money, constituting the primary source of revenue for most businesses.

Percent Change

The percentage difference between two values, indicating the degree of increase or decrease.