Ricardo Buys Cola and Popcorn

question 102

Multiple Choice

Ricardo buys cola and popcorn. Cola sells for $0.50 a can and popcorn sells for $1 per bag. He is in consumer equilibrium. The price of a cola jumps to $1 per can. In his new consumer equilibrium, Ricardo's

• A) marginal utility of cola will be equal to his marginal utility of popcorn.
• B) marginal utility per dollar spent will be 2.
• C) total utility will be higher.
• D) marginal utility of cola will decrease.

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Definitions:

Scatter Diagram

A graphical representation that uses dots to show the relationship between two variables, helping to identify correlations.

Slope

The measure of the steepness or incline of a line, typically described as the ratio of the vertical change to the horizontal change between two points on the line.

Positive Linear Relationship

A direct correlation between two variables in which they both increase or decrease together at a constant rate, as depicted by a positively sloped line on a graph.

Scatter Diagram

A graphical representation of the relationship between two quantitative variables, showing how one variable is affected by changes in the other variable.