True or False: The opportunity cost of an additional bag of bird seed, in terms of other consumption goods, decreases once you have bought more than 4bags of bird seed relative to if you had bought less than 4 bags.TrueFalseWhich of the following bundles of goods are affordable? Check all that apply.4 bags of bird seed and $20 spent on other consumption goods8 bags of bird seed and $20 spent on other consumption goods2 bags of bird seed and $40 spent on other consumption goods 12. Kinked budget constraintsSuppose that your family has just decided to adopt a parakeet named Daisy. You have a monthly budget of $50 that you can choose to spend on eitherbird seed or other consumption goods. Assume the price of a bag of bird seed is $5 for the first 4 bags, but then it drops to only $3 per bag for eachadditional bag. All other consumption goods will be treated as a composite good, so you can think of this as simply the cash left over to spend on otheritems after buying bird seed.On the following graph, use the blue points (circle symbol) to graph your family's budget constraint. Remember to plot from left to right. Line segmentswill automatically connect the points.OTHER CONSUMPTION (Amount per month)50454035302520151050024 6 8 10 12 1416BIRD SEED BAGS (Bags per month)18 20Budget Constraint

A budget constraint represents all the combinations of goods and services that a consumer may…

True or False: The opportunity cost of an additional bag of bird seed, in terms of other consumption goods, decreases once you have bought more than 4 bags of bird seed relative to if you had bought less than 4 bags. True False

True or False: The opportunity cost of an additional bag of bird seed, in terms of other consumption goods, decreases once you have bought more than 4 bags of bird seed relative to if you had bought less than 4 bags. True False

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

True or False: The opportunity cost of an additional bag of bird seed, in terms of other consumption goods, decreases once you have bought more than 4
bags of bird seed relative to if you had bought less than 4 bags.
True
False
Which of the following bundles of goods are affordable? Check all that apply.
4 bags of bird seed and $20 spent on other consumption goods
8 bags of bird seed and $20 spent on other consumption goods
2 bags of bird seed and $40 spent on other consumption goods

12. Kinked budget constraints
Suppose that your family has just decided to adopt a parakeet named Daisy. You have a monthly budget of $50 that you can choose to spend on either
bird seed or other consumption goods. Assume the price of a bag of bird seed is $5 for the first 4 bags, but then it drops to only $3 per bag for each
additional bag. All other consumption goods will be treated as a composite good, so you can think of this as simply the cash left over to spend on other
items after buying bird seed.
On the following graph, use the blue points (circle symbol) to graph your family's budget constraint. Remember to plot from left to right. Line segments
will automatically connect the points.
OTHER CONSUMPTION (Amount per month)
50
45
40
35
30
25
20
15
10
5
0
0
2
4 6 8 10 12 14
16
BIRD SEED BAGS (Bags per month)
18 20
Budget Constraint

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Step 1: Introduce the concept of budget constraint.

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