Debra travels to Mexico and enjoys burritos and Coronas. The diagram at the right shows her utility-maximizing choices. a. If the budget line is line 1, describe why point A is Debra's...


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Option (d) only


Debra travels to Mexico and enjoys burritos and Coronas. The diagram at the right shows her utility-maximizing choices.<br>a. If the budget line is line 1, describe why point A is Debra's utility-maximizing choice. (Select all that apply.)<br>A. At point A, marginal rate of substitution is equal to the relative prices of the two goods.<br>S B.<br>At point A,<br>MUCoronas Pcoronas<br>Pburritos<br>B<br>MUpurritos<br>MUpuritos<br>O C.<br>At point A<br>Pcoronas<br>line 2<br>MUCoronas<br>Pburritos<br>line 1<br>Coronas<br>YD.<br>MUCoronas<br>MUpurritos<br>At point A,<br>Pcoronas<br>Pburritos<br>b. What event can explain why the budget line moves to line 2?<br>O A. An increase in the price of Coronas<br>O B. A decrease in the price of burritos<br>O C. An increase in the price of burritos<br>YD. A decrease in the price of Coronas<br>c. What is the meaning of point B in the figure?<br>Since points A and B share the same indifference curve , the change from point A to point B represents the substitution effect when there is a decrease in<br>the price of Coronas<br>d. Suppose Coronas are a normal good for Debra. What does this restriction imply about the location of point C? Is this restriction satisfied in the diagram?<br>O A. Point C would be on the same indifference curve as point A. This is not satisfied.<br>O B. Point C would correspond to a larger quantity of Coronas when compared to point A. This is satisfied.<br>O C. Point C would correspond to a smaller quantity of Coronas when compared to point A. This is not satisfied.<br>O D. Point C would be on the same budget line as point A. This is not satisfied.<br>so11ung<br>

Extracted text: Debra travels to Mexico and enjoys burritos and Coronas. The diagram at the right shows her utility-maximizing choices. a. If the budget line is line 1, describe why point A is Debra's utility-maximizing choice. (Select all that apply.) A. At point A, marginal rate of substitution is equal to the relative prices of the two goods. S B. At point A, MUCoronas Pcoronas Pburritos B MUpurritos MUpuritos O C. At point A Pcoronas line 2 MUCoronas Pburritos line 1 Coronas YD. MUCoronas MUpurritos At point A, Pcoronas Pburritos b. What event can explain why the budget line moves to line 2? O A. An increase in the price of Coronas O B. A decrease in the price of burritos O C. An increase in the price of burritos YD. A decrease in the price of Coronas c. What is the meaning of point B in the figure? Since points A and B share the same indifference curve , the change from point A to point B represents the substitution effect when there is a decrease in the price of Coronas d. Suppose Coronas are a normal good for Debra. What does this restriction imply about the location of point C? Is this restriction satisfied in the diagram? O A. Point C would be on the same indifference curve as point A. This is not satisfied. O B. Point C would correspond to a larger quantity of Coronas when compared to point A. This is satisfied. O C. Point C would correspond to a smaller quantity of Coronas when compared to point A. This is not satisfied. O D. Point C would be on the same budget line as point A. This is not satisfied. so11ung
Jun 08, 2022
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