Guy Has an Income (Y)of $50 with Which He Can

question 19

Multiple Choice

Guy has an income (Y) of $50 with which he can purchase DVDs (D) at $10 each and haircuts (H) at $20 each. Which one of the following represents Guy's budget line?

• A)Y = 10QD - 20QH
• B)50 = QD + QH
• C)Y = 50 + QD + QH
• D)20Y = QD + 10QH
• E)50 = 10QD + 20QH

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Definitions:

AFC

Average Fixed Costs, which are total fixed costs divided by the quantity of output produced.

AVC

Average Variable Cost; the total variable costs divided by the quantity of output produced.

ATC

Average Total Cost, which is the total cost divided by the quantity of output produced, representing the per-unit production cost.

Marginal Product

The additional output derived from the addition of one more unit of a variable input, holding all other inputs constant.