Assume Molly spends all of her money on corn chips and salsa. Molly would like to be able to buy more of her favorite foods, but unfortunately, Molly has a very limited budget. Given the budget constraint and indifference curves (1-5), where does the optimal chips and salsa bundle for Molly fall?

Assume Molly spends all of her money on corn chips and salsa. Molly would like to be able to buy more of her favorite foods, but unfortunately, Molly has a very limited budget. Given the budget constraint and indifference curves (1-5), where does the optimal chips and salsa bundle for Molly fall?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Revealed Preferences and Budget Constraint Analysis

Revealed means “Let Out,” and Preference means “Choice”; Choice Reveals Preference.

Question

Assume Molly spends all of her money on corn chips and salsa. Molly would like to
be able to buy more of her favorite foods, but unfortunately, Molly has a very limited
budget. Given the budget constraint and indifference curves (1-5), where does the
optimal chips and salsa bundle for Molly fall?
1) There is not an optimal point
2) Point A
3) Point D
4) Point B
5) Point E
Corn chips (bags)
6) Point C

Salsa (ounces)
Budget
constraint
B
A
LL
E
U
1
D
3
5
4
2
Corn chips (bags)

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