C 38 5 20 20 25 Sc 22 In the figure above which of the follo

C. 38 5 20 20 25 Sc 22. In the figure above which of the following is true? a. b. c. d. e. The consumer is indifferent between Bundle A and Bundle C. Bundles A and B cost the same amount of money. An increase in the price of X caused the shift from BC1 to BC2. All of the above answers are true. None of the above answers is true. 23. In the figure above which of the following is true? On BC1, X costs $50. On BC2, X costs $25 and Y costs $50. If the consumer\'s budget constraint is BC1, then both Bundle A and Bundle B will maximize his utility. a. b. c. d. On BC1, X costs half as much as it costs on BC2 e. None of the above is true.

Solution

(22) (d)

Since A & C are on same indifference curve, consumer is indifferent between them.

A & B are on the same budget line, costing same amount of money.

Finally, as price of X increased, budget line shifted inwards.

(23) (d)

Horizontal intercept of BC1 is double that of BC2, so X must cost half in BC2 of that in BC1.

(24) (d)

It\'s the price-consumption curve for good X.

(25)

If price of substitute decreases, this good\'s demand decreases, so demand curve shifts left. At the same time, higher input prices will decrease supply, so supply curve shifts left. New equilibrium is at point A where D1 intersects S1.