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-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.
-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?


Definitions:

Subjective Value

The individual and personal valuation of a good or service rather than its market value, based on personal preferences, needs, or satisfaction derived.

Equilibrium

A balance between market demand and supply that results in steady prices.

Budget Line

A budget line represents all combinations of goods and services that a consumer may purchase given current prices and income levels.

Marginal Rate of Substitution

How quickly a person agrees to trade one product for a different one to preserve their overall happiness.

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