Figure 21-20 The Following Graph Illustrates a Representative Consumer's Preferences for Marshmallows

question 247

Multiple Choice

Figure 21-20
The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies:
-Refer to Figure 21-20. Assume that the consumer has an income of $80. If the price of chocolate chips is $4 and the price of marshmallows is $4, the optimizing consumer would choose to purchase

• A)9 marshmallows and 6 chocolate chips.
• B)10 marshmallows and 10 chocolate chips.
• C)5 marshmallows and 5 chocolate chips.
• D)3 marshmallows and 9 chocolate chips.

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Definitions:

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period, typically showing a downward slope from left to right.

Supply of Money

The total value of money available in an economy at a specific time, including cash, coins, and balances in bank accounts.

Tight Monetary Policy

A monetary policy strategy used by central banks to decrease the money supply and increase interest rates to control inflation and stabilize the currency.

Net Exports

The value of a country's total exports minus the value of its total imports. It is a component of a country’s GDP.