Now Suppose Your Income Returns to Its Original Level,$300,the Price

question 70

Multiple Choice

Now suppose your income returns to its original level,$300,the price of sweaters remains constant at $20,but the price of jeans falls from $60 per pair to $30 per pair,so your new budget constraint is $30j + $20s = $300.This rotation of your budget constraint is shown in the graph below.

As a result of the decrease in the price of jeans from $60 per pair to $30 per pair,the opportunity cost of a pair of jeans ________.

• A) remains unchanged at 3 sweaters
• B) falls to 2 sweaters
• C) falls to 1.5 sweaters
• D) falls to sweaters

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Definitions:

Prototype

An original form or model of something from which later versions are derived or on which they are based.

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An instance or case that represents a common or usual pattern, often used as a standard or model to explain broader concepts.

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A class or division of people or things regarded as having particular shared characteristics.

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The process by which a preceding stimulus influences the response to a later stimulus, based on meaning.