Suppose the Only Two Goods That Lorenzo Consumes Are Wine

question 150

Multiple Choice

Suppose the only two goods that Lorenzo 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 Lorenzo's budget has not changed.
• B)the slope of Lorenzo's budget constraint is flatter at the new prices.
• C)the slope of Lorenzo's budget constraint is steeper at the new prices.
• D)Lorenzo's budget constraint has shifted in a parallel fashion to the budget constraint with the old prices.

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Definitions:

Threshold Point

The critical juncture in a process or system at which a significant effect or change occurs; often used in decision-making or in understanding when a situation becomes critical.

Complex Interactions

Situations where multiple variables and factors interact in intricate ways, leading to unpredictable outcomes.

Team Size

The number of members within a team, impacting the team's dynamics, performance, and communication.

Effective Group Process

Effective group process involves strategies and behaviors that enable a team to operate efficiently, make decisions collaboratively, and achieve its objectives harmoniously.