Author Question: Suppose a consumer only purchases food and clothing, and food is plotted along the horizontal axis ... (Read 27 times)

audie · **on:** Jul 1, 2018

Suppose a consumer only purchases food and clothing, and food is plotted along the horizontal axis of the consumer's indifference map. If the price of food and clothing increase and income does not change, then the budget line changes by rotating:

A) counter-clockwise about the fixed vertical axis intercept.
B) clockwise about the fixed vertical axis intercept.
C) counter-clockwise about the fixed horizontal axis intercept.
D) clockwise about the fixed horizontal axis intercept.
E) none of the above

Question 2

Your firm owns an old truck that is used to make local deliveries. The truck is fully depreciated and only costs 1.20 per hour to operate, but you could rent it to another firm for 15.00 per hour.

What is the opportunity cost of operating this truck in your business? A) 1.20 per hour
B) 15.00 per hour
C) 16.20 per hour
D) Less than 1.20 per hour