Herbudgetis20andthethreegoodsaresmoothies2apiecemoviet

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Unformatted text preview: sumption if an increase in the price of one causes a __________ shift in the demand curve for the other. a. complements, rightward b. complements, leftward c. substitutes, leftward d. all of the above e. none of the above Background for 8, 9 and 10: Shanta has discovered that she is as happy as can be given her budget if she buys just three goods each week. Her budget is $20, and the three goods are smoothies ($2 apiece), movie tickets ($6 apiece), and highlighters ($1 apiece). Here is the total utility attached to purchases of each of these: Total utility of each: Number Smoothies Movies Highlighters 1 50 240 20 2 90 330 35 390 45 3 120 4 140 420 50 8. Which of the following combinations is (are) affordable given Shanta’s budget? a. 1 smoothie, 1 movie, 1 highlighter b. 2 smoothies, 2 movies, 2 highlighters Midterm One, Economics 101.007, Fall 2011 3 c. 3 smoothies, 3 movies, 3 highlighters d. only a and b e. only b and c 9. What is the affordable combination that provides Shanta with the greatest utility? a. 4 smoothies, 4 movies, 4 highlighters b. 3 smoothies, 2 movies, 2 highlighters c. 2 smoothies, 2 movies, 4 highlighters d. all of the above e. none of the above 10. The rational spending rule...
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