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:

Union

A union is an organized association of workers formed to protect and further their rights and interests.

Promotion

In a business context, promotion refers to activities designed to increase consumer awareness, interest, and purchase of a product or service, often through advertising and marketing strategies.

Corrupt

Engaged in dishonest, unethical, or fraudulent activities, often involving bribery or manipulation, to gain personal or organizational advantage.

Production Manager

An individual responsible for overseeing the production process in a manufacturing plant or company, ensuring efficient operations and meeting production targets.