Suppose That the Quantity of Hamburgers Is Measured Along the Vertical

question 39

Multiple Choice

Suppose that the quantity of hamburgers is measured along the vertical axis and that the number of bags of popcorn is measured along the horizontal axis. The budget constraint has a vertical intercept of 10 hamburgers, and the slope of the line is -1. If the price of popcorn doubles, we know that

• A) the consumer will buy half as many bags of popcorn as before.
• B) the new equilibrium will have a marginal rate of substitution of -2.
• C) the new equilibrium will have a marginal rate of substitution of -0.5.
• D) the vertical axis of the budget line shifts to 5 hamburgers.

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