Assume Roger Has $48 to Spend on Books and Movie

question 116

Multiple Choice

Assume Roger has $48 to spend on books and movie tickets and his budget constraint is represented by line B in the graph shown. What would cause his budget constraint to move to line A?

• A)Roger gets a raise at work.
• B)Roger gets unlimited coupons for $2 off the price of a movie ticket.
• C)The price of movie tickets increases to $8.
• D)None of these changes would cause Roger's budget constraint to move from line B to line A.

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Definitions:

Affect Heuristic

A mental shortcut used in decision making and judgement that involves relying on emotions and feelings.

Regret Aversion

A theory in behavioral economics that describes the emotional reaction people experience after realizing they have made an error in judgment, leading them to avoid making decisions.

Money Illusion

Money illusion is a cognitive bias where people misjudge the value of money in terms of its purchasing power, typically neglecting the effects of inflation or deflation.

Representativeness Heuristic

A cognitive bias in decision-making where the likelihood of an event is estimated based on how similar it is to the typical case.