If Bert's Budget Constraint Is Represented in the Graph Shown

question 34

Multiple Choice

If Bert's budget constraint is represented in the graph shown, his opportunity cost of three bags of chips is:

• A)twelve pints of ice cream.
• B)eight pints of ice cream.
• C)four pints of ice cream.
• D)Cannot answer without knowing Bert's income.

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Definitions:

Simple Interest

Interest calculated only on the principal amount, or the initial sum of money borrowed or invested, without compounding.

Finance Company

A business that provides loans to individuals and companies, unlike banks, primary lending revolves around installment credit and financing consumer purchases.

Assignable Loan Contract

A loan agreement that allows the lender to transfer the loan to another party.

Simple Interest Rate

The simple interest rate is the percentage of an original sum of money (principal) charged for borrowing or paid for investment over a given period.