-Max Has Allocated $100 Toward Meats for His Barbecue

question 36

Multiple Choice

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What happens if Max receives a $100 cash grant to buy either meat or chicken?

• A) Max will double his consumption of both meats.
• B) Max will spend it all on burger. Because of its lower price, he can buy more of it.
• C) Max will take advantage of the gift by buying all chicken because it is the more expensive meat.
• D) There is not enough information to answer the question.

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Definitions:

Nonrenewable Resource

A natural resource that cannot be replaced at the same rate it is consumed, such as oil, coal, and natural gas.

Selling Price

The price at which a product or service is sold to customers.

Extraction Cost

The expenses associated with the removal of resources or raw materials from their natural setting.

Optimal Quantity

The amount of a product or service that achieves the best balance between costs and benefits, maximizing utility or profit.