Essay
-Sherry is on vacation and wants to bring souvenirs home to family and friends. Her souvenir budget is $100, and she can choose between T-shirts, which cost $20 each, and key chains, which cost $5 each.
a) Draw a graph of Sherry's budget line in the figure above.
b) What is the slope of Sherry's budget line? How does that slope represent an opportunity cost?
Suppose that Sherry now finds a store where T-shirts are on sale for $10 each. (Key chains still cost $5 each).
c) Draw the new budget line in the figure.
d) What is the slope of the new budget line? How has the opportunity cost changed?
Correct Answer:
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a) The budget line is in the figure abo...View Answer
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Correct Answer:
Verified
a) The budget line is in the figure abo...View Answer
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