Answered: Refer to Scenario#1. If the price of…

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Refer to Scenario#1. If the price of cola doubles to $3 while the income and the price of pizza are constant, then the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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Scenario#1: Suppose the price of pizza is $10, the price of cola is $1, and the consumer's income is $60. In
addition, suppose the consumer's budget constraint measures pizza on the horizontal axis and cola on the
vertical axis.
Refer to Scenario#1. If the price
cola doubles to $3 while the income and the price of pizza are constant,
then the
budget constraint shifts inward in a parallel fashion
budget constraint intersects the vertical axis at 20 colas
slope of the budget constraint rises to -2
budget constraint intersects the vertical axis at 30 colas

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