Johnny Has $100 to Spend on Books and All Other

question 86

Essay

Johnny has $100 to spend on books and all other goods.Books cost $20 each and Johnny is at equilibrium consuming 3 books and $40 worth of other goods.Johnny's grandmom wants to give Johnny either a book or $20 for his birthday.Which gift does Johnny prefer? Explain using an indifference map and budget lines.

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Definitions:

Bedrock

The solid rock underlying loose deposits such as soil or alluvium.

Reddish Dust

Fine, reddish particulate matter, often from desert areas, that can be transported long distances by wind.

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Large areas of ice that cover less than 50,000 square kilometers, generally found at high latitudes or elevations and differing from ice sheets.

Impact Craters

Depressions on the surface of a planet or moon created by the collision with another celestial body.