Economics 19th Edition by Stanley Brue, Cambell McConnell, Campbell McConnell, Sean Masaki Flynn, Sean Flynn

Exercise 3

Suppose you won $15 on aticket at the7-Elevan and decided to spend all the winnings on candy bars and bags of peanuts. The price of candy bars is $0.75 and the price of peanuts is $1.50.
a. Construct a table showing the alternative combinations of the two products that are available,
b. Plot the data in your table as a budget line in a graph. What is the slope of the budget line What is the opportunity cost of one more candy bar Of one more bag of peanuts Do these opportunity costs rise, fall, or remain constant as each additional unit of the product is purchased
c. Does the budget line tell you which of the available com­binations of candy bars and bags of peanuts to buy
d. Suppose that you had won $30 on your ticket, not $15. Show the $30 budget line in your diagram. Has the num­ber of available combinations increased or decreased