Asked by Aliyah Grant on Jul 30, 2024
Verified
Murphy used to consume 100 units of X and 50 units of Y when the price of X was $2 and the price of Y was $4.If the price of X rose to $3 and the price of Y rose to $8, how much would Murphy's income have to rise so that he could still afford his original bundle?
A) $750
B) $250
C) $300
D) $500
E) None of the above.
Original Bundle
The combination of goods and services initially allocated or owned by a consumer before any trades are made.
Price Of X
The specific cost or amount of money required to purchase a good or service denoted as "X".
Price Of Y
Refers to the cost associated with procuring or buying a specific product or service, denoted as "Y."
- Execute the concept of opportunity cost when allocating resources in various circumstances.
Verified Answer
ZK
Zybrea KnightAug 02, 2024
Final Answer :
C
Explanation :
Murphy's original expenditure was (100*$2)+(50*$4) = $300.
Now, the new prices give us the following expenditure for the original bundle: (100*$3)+(50*$8) = $700.
So, Murphy's new income needs to be $700-$300 = $400 more than his original income.
Therefore, the correct answer is option C, $300.
Now, the new prices give us the following expenditure for the original bundle: (100*$3)+(50*$8) = $700.
So, Murphy's new income needs to be $700-$300 = $400 more than his original income.
Therefore, the correct answer is option C, $300.
Learning Objectives
- Execute the concept of opportunity cost when allocating resources in various circumstances.