Chapter 2 Trae-False Budget Constraint Difficultv: 1 %o Correct Responses: 90 Discriminat ion Index: 10 Correct Answer: False 2.1 If t here are two goods wit h positive prices and t he price of one good is reduced, while income and ot her prices remain constant, t hen the size of the budget set is reduce Topic: Budget Constraint Difficulty: 1 o Correct Respo Discriminat ion index: 24 Correct Answer: False 2.2 If good 1 is measured on the horizont al axis and good 2 is measured on the vertical axis, and if the price of good 1 is Pi and the price of good 2 is P2, then the slope of the budget line is-P2/pl Topic: Budget Constraint Difficulty: 1 %o Correct Responses: 91 Discrimination Index: 13 Correct Answer: False 2.3 If all prices are doubled and money income is left the same, the budget set does not change because rel ative prices dont change Topic: Budget Constraint Difficulty: 1 Discriminat ion index: 21 Correct Ans 2.4 If there are two goods, and if one good has a negative price and the ot her has a positive price, then the slope of the budget line will be positive Topic: Budget Constraint Difficulty: 1 Correct Responses: 94 Discriminat ion Index: 12 Correct Answer: False 2.5 If all prices double and income triples, t hen the budget line will become steeper
Chapter 2 True-False Budget Constraint Topic: Budget Constraint Diculty: 1 % Correct Responses: 90 Discrimination Index: 10 Correct Answer: False 2.1 If there are two goods with positive prices and the price of one good is reduced, while income and other prices remain constant, then the size of the budget set is reduced. Topic: Budget Constraint Diculty: 1 % Correct Responses: 76 Discrimination Index: 24 Correct Answer: False 2.2 If good 1 is measured on the horizontal axis and good 2 is measured on the vertical axis, and if the price of good 1 is p1 and the price of good 2 is p2; then the slope of the budget line is p2=p1. Topic: Budget Constraint Diculty: 1 % Correct Responses: 91 Discrimination Index: 13 Correct Answer: False 2.3 If all prices are doubled and money income is left the same, the budget set does not change because relative prices don't change. Topic: Budget Constraint Diculty: 1 % Correct Responses: 93 Discrimination Index: 21 Correct Answer: True 2.4 If there are two goods, and if one good has a negative price and the other has a positive price, then the slope of the budget line will be positive. Topic: Budget Constraint Diculty: 1 % Correct Responses: 94 Discrimination Index: 12 Correct Answer: False 2.5 If all prices double and income triples, then the budget line will become steeper
CHAPTER 2 Budget Cons traint Topic: Budget Constraint Difficulty: 1 y Correct Responses: 95 Discrimination Index: 13 Correct Answer: False 2.6 If Good 1 is on the horizont al axis and good 2 is on the vertical axis t hen an increase in the price of Good I will not change the horizont al intercept of the budget line Difficulty: I Correct Responses: 98 Discriminat ion Index: I 2.7 If t here are two goods and the prices of bot h goods rise, then the budget line must become strait y Correct Responses D Correct Answer: True 2.8 There are two goods. You know how much of good 1 a consumer can afford if she spends all of her income on good 1. If you know the ratio of the prices of the two goods, t hen you could draw t he consumer, s budget line wit hout any more information Topic: Budget Const rai Discrimination Index: 0 Correct Answer: True 2. 9 A consumer prefers more to less of every good. Her income rises, and the price of one of the goods falls while ot her prices st ay const ant. These changes must have made her better off %o Ce ResI Discrimina Correct Answer: True 2.10 There are 3 goods. The of good 3 is +2. It is physically possi ble for a consumer to consume dity bundle with non-negative amounts of each good. A consumer who has income of 10 could afford to consume some commodity bundles that include 5 units of good 1 and 6 units of good 2 Difficulty:1 Correct Responses: 80 Discriminat ion Index 2.11 A decrease in income pivots the budget line around the bundle initially consumed
CHAPTER 2 Budget Constraint 2 Topic: Budget Constraint Diculty: 1 % Correct Responses: 95 Discrimination Index: 13 Correct Answer: False 2.6 If Good 1 is on the horizontal axis and Good 2 is on the vertical axis, then an increase in the price of Good 1 will not change the horizontal intercept of the budget line. Topic: Budget Constraint Diculty: 1 % Correct Responses: 98 Discrimination Index: 1 Correct Answer: False 2.7 If there are two goods and the prices of both goods rise, then the budget line must become steeper. Topic: Budget Constraint Diculty: 1 % Correct Responses: 97 Discrimination Index: 0 Correct Answer: True 2.8 There are two goods. You know how much of good 1 a consumer can a ord if she spends all of her income on good 1. If you know the ratio of the prices of the two goods, then you could draw the consumer's budget line without any more information. Topic: Budget Constraint Diculty: 1 % Correct Responses: 91 Discrimination Index: 0 Correct Answer: True 2.9 A consumer prefers more to less of every good. Her income rises, and the price of one of the goods falls while other prices stay constant. These changes must have made her better o . Topic: Budget Constraint Diculty: 2 % Correct Responses: 0 Discrimination Index: 0 Correct Answer: True 2.10 There are 3 goods. The price of good 1 is 1; the price of good 2 is +1; and the price of good 3 is +2. It is physically possible for a consumer to consume any commodity bundle with non-negative amounts of each good. A consumer who has income of 10 could a ord to consume some commodity bundles that include 5 units of good 1 and 6 units of good 2. Topic: Budget Constraint Diculty: 1 % Correct Responses: 80 Discrimination Index: 49 Correct Answer: False 2.11 A decrease in income pivots the budget line around the bundle initially consumed
Multiple Ch noce Budget Const raint gi fdat casthaint DEI aince (e任 If she spends all of her income on lemons and tangerines, Isabell a can just afford 30 lemons and 8 tangerines per day. She could also use her entire budget to buy 6 lemons and 14 tangerines per d ay. The price of lemons is 6 guineas each. How much is Isabellas income per day (a)372 guineas (b)377 guinea ( d)363 guineas (e) None of the above kcet stant Dknulrctnrce. 6 ISe If she spends all of her income on uglifruit and breadfruits, Maria can just afford 11 uglifr per day. The price of uglifruit is 6 pesos each. How much is Maria's income per day:? breadfruits and 4 breadfruits per day. She could also use her entire budget to buy 3 uglifruit and (c)114 pesos (d)105 pesos (e) None of the above
Multiple Choice Budget Constraint Topic: Budget Constraint Diculty: 1 % Correct Responses: 97 Discrimination Index: 6 Correct Answer: A 2.1 If she spends all of her income on lemons and tangerines, Isabella can just a ord 30 lemons and 8 tangerines per day. She could also use her entire budget to buy 6 lemons and 14 tangerines per day. The price of lemons is 6 guineas each. How much is Isabella's income per day? (a) 372 guineas (b) 377 guineas (c) 371 guineas (d) 363 guineas (e) None of the above. Topic: Budget Constraint Diculty: 1 % Correct Responses: 97 Discrimination Index: 6 Correct Answer: A 2.2 If she spends all of her income on uglifruit and breadfruits, Maria can just a ord 11 uglifruit and 4 breadfruits per day. She could also use her entire budget to buy 3 uglifruit and 8 breadfruits per day. The price of uglifruit is 6 pesos each. How much is Maria's income per day? (a) 115 pesos (b) 119 pesos (c) 114 pesos (d) 105 pesos (e) None of the above
CHAPTER 2 Budget Cons traint Topic: Budget Constraint Difficulty: 2 y Correct Responses: o Discrimination Index: 0 Correct Answer: A 2.3 Matt lives on popcorn and seafood sal ads. The price of popcorn is 1 doll ar per bag and the price of seafood sal ads is 2 dollars each. Matt allows himself to spend no more than 13 doll ars a d ay on food. He also rest ricts his consumption to 5, 500 calories per d ay. There are 1,000 calories n a bag of popcorn and 500 calories in a seafood sal ad. If he spends his entire money budget each day and consumes no more calories than his calorie limit (a)he can consume up to 3 bags of popcorn per day, but no more (b) he can consume up to l bags of popcorn per day, butno more (c he can consume up to 5 seafood sal ads per day, but no more (d)he can consume up to 4 bags of popcorn per day, but no more (e) None of the above Topic: Budget Diffic %o Cor Responses: 0 rrect Answer: A 2.4 Quincy lives on ding dongs and seafood salads. The price of di ng dongs is 1 dollar per bag and the price of seafood sal ads is 4 dollars each. Quincy allows hi mself to spend no more than 23 doll ars a d ay on food. He also restricts his consumption to 3, 300 calories per day. There are 600 calories in a bag of ding dongs and 300 calories in a seafood salad. If he spends his entire money budget each day and consumes no more calories than his calorie li mit e up to 3 bags of ding dongs per day, but ne (b)he can consume up to l bags of ding dongs per day, butno more (c) he can consume up to 5 seafood sal ads per day, but no more d) he can consume up to 4 bags of ding dongs per day, but no more (e) None of the above
CHAPTER 2 Budget Constraint 4 Topic: Budget Constraint Diculty: 2 % Correct Responses: 0 Discrimination Index: 0 Correct Answer: A 2.3 Matt lives on popcorn and seafood salads. The price of popcorn is 1 dollar per bag and the price of seafood salads is 2 dollars each. Matt allows himself to spend no more than 13 dollars a day on food. He also restricts his consumption to 5,500 calories per day. There are 1,000 calories in a bag of popcorn and 500 calories in a seafood salad. If he spends his entire money budget each day and consumes no more calories than his calorie limit: (a) he can consume up to 3 bags of popcorn per day, but no more. (b) he can consume up to 1 bags of popcorn per day, butno more. (c) he can consume up to 5 seafood salads per day, but no more. (d) he can consume up to 4 bags of popcorn per day, but no more. (e) None of the above. Topic: Budget Constraint Diculty: 2 % Correct Responses: 0 Discrimination Index: 0 Correct Answer: A 2.4 Quincy lives on ding dongs and seafood salads. The price of ding dongs is 1 dollar per bag and the price of seafood salads is 4 dollars each. Quincy allows himself to spend no more than 23 dollars a day on food. He also restricts his consumption to 3,300 calories per day. There are 600 calories in a bag of ding dongs and 300 calories in a seafood salad. If he spends his entire money budget each day and consumes no more calories than his calorie limit: (a) he can consume up to 3 bags of ding dongs per day, but no more. (b) he can consume up to 1 bags of ding dongs per day, butno more. (c) he can consume up to 5 seafood salads per day, but no more. (d) he can consume up to 4 bags of ding dongs per day, but no more. (e) None of the above
MULTIPLE CHOICE Topic: Budget Constraint Difficulty: 1 y Correct Responses: 88 Correct Answer: A Teresa spends her entire budget and consumes 6 units of a and 20 units of y. The price of a twice the price of y. Her income doubles and the price of y doubles, but the price of r st ays the same. If she continues to buy 20 units of y, what is the largest number of units of a that she can a)12 c)14 (e)There is not enough information to say Topic: Budget Constraint Difficulty: 1 Res Discriminat ion Index: 20 2.6 Linda spends her entire budget and consumes 15 units of a and 19 units of y. The price of a is twice the price of y. Her income doubles and the price of y doubles, but the price of a st ays the same. If she continues to buy 19 units of y, what is the largest number of units of z that she can (b)15 (e)There is not enough information to say Topic: Budget Constrain Difficulty:1 y Correct Responses: 50 Discriminat ion Index: 50 2.7 In year 1, the price of good z was 1, the price of good y was 1, and income was 30. In y 2, the price of 6, the price of good y was 5, and income was 30. On a graph with z on the horizont al axis and y on the vertical, the new budget line is ( a) fatter than the old one and lies below it (b)flatter than the old one and lies above it (c) steeper than the old one and lies below it (d)steeper than the old one and lies above it (e)none of the above
MULTIPLE CHOICE 5 Topic: Budget Constraint Diculty: 1 % Correct Responses: 88 Discrimination Index: 20 Correct Answer: A 2.5 Teresa spends her entire budget and consumes 6 units of x and 20 units of y. The price of x is twice the price of y. Her income doubles and the price of y doubles, but the price of x stays the same. If she continues to buy 20 units of y; what is the largest number of units of x that she can a ord? (a) 12 (b) 6 (c) 14 (d) 16 (e) There is not enough information to say. Topic: Budget Constraint Diculty: 1 % Correct Responses: 88 Discrimination Index: 20 Correct Answer: A 2.6 Linda spends her entire budget and consumes 15 units of x and 19 units of y. The price of x is twice the price of y. Her income doubles and the price of y doubles, but the price of x stays the same. If she continues to buy 19 units of y; what is the largest number of units of x that she can a ord? (a) 30 (b) 15 (c) 32 (d) 34 (e) There is not enough information to say. Topic: Budget Constraint Diculty: 1 % Correct Responses: 50 Discrimination Index: 50 Correct Answer: C 2.7 In year 1, the price of good x was 1, the price of good y was 1, and income was 30. In year 2, the price of x was 6, the price of good y was 5, and income was 30. On a graph with x on the horizontal axis and y on the vertical, the new budget line is: (a) atter than the old one and lies below it. (b) atter than the old one and lies above it. (c) steeper than the old one and lies below it. (d) steeper than the old one and lies above it. (e) none of the above
CHAPTER 2 Budget Co nstraint Rcet istant dIfc lit etR( ases 5o DEnliafinrce so ISa 2s, In m, thep i ec CSh, th ep T ea, gccdy w CS2. ading ew CS60 iy fcr 2, t ep Ti;ecz w gsir. fh ep eG, addy wls&, aIcR ew(S60. onaggch wIth h Caiaaisado the there b cot reis (a)fatter than the old one and lies below it (b) Hatter than the old one and lies above it (c) steeper than the old one and lies below it (d steeper than the old one and lies above it one Toi. Rdt tastant R6s635 Cnetaiset d If Sh es arc'sh eratigeb acgt v afssac mnrcdaz, @ctsad1o cherries Shecandojat (0Cd9c团hepd(的 c afs Wh ctisth epT e@ ch ein6S ncert? (e) None of the above
CHAPTER 2 Budget Constraint 6 Topic: Budget Constraint Diculty: 1 % Correct Responses: 50 Discrimination Index: 50 Correct Answer: C 2.8 In year 1, the price of good x was 4, the price of good y was 2, and income was 60. In year 2, the price of x was 17, the price of good y was 8, and income was 60. On a graph with x on the horizontal axis and y on the vertical, the new budget line is: (a) atter than the old one and lies below it. (b) atter than the old one and lies above it. (c) steeper than the old one and lies below it. (d) steeper than the old one and lies above it. (e) none of the above. Topic: Budget Constraint Diculty: 1 % Correct Responses: 35 Discrimination Index: 8 Correct Answer: D 2.9 If she spends her entire budget, Vanessa can a ord 47 apricots and 10 cherries. She can also just a ord 20 apricots and 19 cherries. The price of apricots is 18 cents. What is the price of cherries in cents? (a) 64 (b) 3 (c) 21 (d) 54 (e) None of the above
MULTIPLE CHOI at irge D30%ata nde 2.10 If S es arch ratner H aacanGrck39 p( ESad12, p (@7S Sh ec andcjut crd 24 p tch sadi? p eC?s 3 Tk ec p Ech SiS cats Wh ctisth ep l e@ p ecnsnc arf? (e None of the above g0.hato nde 11 Haai t i santv ogres bararcsadop ls Tect@ baracsis30 m CESEGH th ect Gp lsisis m GGh. If h ermen els210 m CI S hO, man baracsc cms e ses arcsaloherrgn emb arace ) None of the above GtRErOe 100 D 242hato nde B ke中示 santoro(Csm sadm dlrs hecto m argcsiS30y mech thecate m trsis15 yantdh If herran els180 y mhO man masse ms eby i se sp acs aloh ermgm emm agcs (e None of the above
MULTIPLE CHOICE 7 Topic: Budget Constraint Diculty: 1 % Correct Responses: 35 Discrimination Index: 8 Correct Answer: D 2.10 If she spends her entire budget, Heidi can a ord 39 peaches and 12 pears. She can also just a ord 24 peaches and 17 pears. The price of peaches is 9 cents. What is the price of pears in cents? (a) 37 (b) 3 (c) 12 (d) 27 (e) None of the above. Topic: Budget Constraint Diculty: 1 % Correct Responses: 100 Discrimination Index: 0 Correct Answer: B 2.11 Heidi thrives on two goods: bananas and apples. The cost of bananas is 30 marks each and the cost of apples is 15 marks each. If her income is 210 marks, how many bananas can she buy if she spends all of her income on bananas? (a) 5 (b) 7 (c) 14 (d) 10 (e) None of the above Topic: Budget Constraint Diculty: 1 % Correct Responses: 100 Discrimination Index: 0 Correct Answer: B 2.12 Teresa thrives on two goods: mangos and melons. The cost of mangos is 30 yen each and the cost of melons is 15 yen each. If her income is 180 yen, how many mangos can she buy if she spends all of her income on mangos? (a) 4 (b) 6 (c) 12 (d) 9 (e) None of the above
GAP ER2 Echt ctant 以% at 20% a Inde 2. 13 Yoram spends his ent ire income on 1l sac ks of acorns and 5 crates of butternuts. The prie of 1 doll affo wit h a sac ks of acorns and b crates of but ternuts w hic h sat is fies t he bud get equat io (4A (b)8A+20B=188 4+14B=96 ((p None of the C D20022 2.14 Eduardo spends his ent ire income on 12 sacks of acorns and 2 crates of butternuts. T he price of acorns is 2 dollars per sack and his income is 34 dollars. He can just afford a com m odity bund le with a sacks of acorns and B crates of butternuts w hich sat isfies t he budget equation (C2+7B=3 b)44+10B=68 C)4+5B=34 C24+9B=36 None of the above D rEine D30 ta nae CaiGtanswe is 4 dollars each and t he cost of bananas is 3 dollars per bunch. If Harry spent all of his income on bananas, he could afford 12 bunc hes of bananas per week. How many paper bac k no Vels could he buy if he spent all of his income on paper bac k novels? (O None of the above
CHAPTER 2 Budget Constraint 8 Topic: Budget Constraint Diculty: 1 % Correct Responses: 76 Discrimination Index: 34 Correct Answer: B 2.13 Yoram spends his entire income on 11 sacks of acorns and 5 crates of butternuts. The price of acorns is 4 dollars per sack and his income is 94 dollars. He can just a ord a commodity bundle with A sacks of acorns and B crates of butternuts which satis es the budget equation: (a) 4A + 12B = 94. (b) 8A + 20B = 188. (c) 6A + 10B = 94. (d) 4A + 14B = 96. (e) None of the above. Topic: Budget Constraint Diculty: 1 % Correct Responses: 76 Discrimination Index: 34 Correct Answer: B 2.14 Eduardo spends his entire income on 12 sacks of acorns and 2 crates of butternuts. The price of acorns is 2 dollars per sack and his income is 34 dollars. He can just a ord a commodity bundle with A sacks of acorns and B crates of butternuts which satis es the budget equation: (a) 2A + 7B = 34. (b) 4A + 10B = 68. (c) 4A + 5B = 34. (d) 2A + 9B = 36. (e) None of the above. Topic: Budget Constraint Diculty: 1 % Correct Responses: 99 Discrimination Index: 5 Correct Answer: C 2.15 Harry thrives on two goods, paperback novels and bananas. The cost of paperback novels is 4 dollars each and the cost of bananas is 3 dollars per bunch.If Harry spent all of his income on bananas, he could a ord 12 bunches of bananas per week. How many paperback novels could he buy if he spent all of his income on paperback novels? (a) 36 (b) 48 (c) 9 (d) 16 (e) None of the above
MULTIPLE CHOI Topic: Budget Constraint Difficulty: 1 y Correct Responses: 92 Discrimination Index Correct Answer: F 2.16 Suppose t hat the prices of good a and good y bot h double, and income triples. On a graph where the budget line is drawn with z on the horizont al axis and y on the vertical axis ( a, the budget line becomes steeper and shifts inward b)the budget line becomes flatter and shifts outward (c) the budget line becomes flatter and shifts inward he new budget line is parallel to the old budget line and lies below it (e None of the above Topic: Budget Constraint %o Correct Responses: 96 Discriminat ion Correct Answer: D 2.17 Suppose that the price of good a triples and the price of good y doubles while income remains const ant. On a graph where the budget line is drawn with z on the horizont al axis and y on the vertical axis, t he new budget line is fatter than the old one and lies below (b) is fatter than the old one and lies above it (c) crosses the old budget line s steeper than the old one and lies below it (e is steeper than the old one and lies above it Topic: Budget Constraint %o Correct Responses: rrect 2.18 While traveling abroad, Tammy spent all of the money in her purse to buy 5 pl ates of spaghetti and 6 oysters. Spaghetti costs 8 units of the local currency per pl ate and she had 82 units of currency in her purse. If s denotes the number of plates of spaghetti and o denotes t he number of oysters purchased, t he set of commodity bundles that she could just afford wit h the money in her purse is descri bed by the eq 82+6o/82 c)8s+7o/82 (e There is not enough information to determine the answer
MULTIPLE CHOICE 9 Topic: Budget Constraint Diculty: 1 % Correct Responses: 92 Discrimination Index: 25 Correct Answer: E 2.16 Suppose that the prices of good x and good y both double, and income triples. On a graph where the budget line is drawn with x on the horizontal axis and y on the vertical axis: (a) the budget line becomes steeper and shifts inward. (b) the budget line becomes atter and shifts outward. (c) the budget line becomes atter and shifts inward. (d) the new budget line is parallel to the old budget line and lies below it. (e) None of the above. Topic: Budget Constraint Diculty: 1 % Correct Responses: 96 Discrimination Index: 18 Correct Answer: D 2.17 Suppose that the price of good x triples and the price of good y doubles while income remains constant. On a graph where the budget line is drawn with x on the horizontal axis and y on the vertical axis, the new budget line: (a) is atter than the old one and lies below it. (b) is atter than the old one and lies above it. (c) crosses the old budget line. (d) is steeper than the old one and lies below it. (e) is steeper than the old one and lies above it. Topic: Budget Constraint Diculty: 3 % Correct Responses: 0 Discrimination Index: 0 Correct Answer: C 2.18 While traveling abroad, Tammy spent all of the money in her purse to buy 5 plates of spaghetti and 6 oysters. Spaghetti costs 8 units of the local currency per plate and she had 82 units of currency in her purse. If s denotes the number of plates of spaghetti and o denotes the number of oysters purchased, the set of commodity bundles that she could just a ord with the money in her purse is described by the equation: (a) 82 + 6o = 82. (b) 6s + 8o = 82. (c) 8s + 7o = 82. (d) 5s + 6o = 82. (e) There is not enough information to determine the answer
CHA PTER 2 Budget Constraint 了;Rt(atit Dinic.at (cnetrescss o DiSlmirdtnirce. o cnetalsee Eily fo w atstosainse ew egtsothathe anpa rOtan. Eily fatsan, m ikshaes Irah, Mlksh ak.&thlm S1 <& ads Iah aqiesadasgigos iah has 200 caas hiy e Ieers, arsmaethans20 aca n rcdadheaw as aisin Sati ats000 caamsperca Whih o thernQigsieessani tne (a) Billy Bob consumes at least 9 milkshakes a day (b) Billy Bob never consumes more than 6 servings of spinach a day (c) Billy Bob never consumes positive amounts of both goods (d) Billy Bob consumes only milkshakes (e) None of the above Fi. Ect thant icnetrtsasS 81 DICT'nlrctnulce. 21 cretans efp 22 a[ ctatcsardhemmg Whenthep n e@ p dateS,&,@ ISper ak adthe n ec hemirgw ass l@ is,er lk.hes atnserfreng eto ll. 5 saks p Ctatcesadio clOS Q hRgp Ermgth. NQthegoem entsus sp ctat(. Manet n. Sha ntchargd blt qrst esgt asus cs cl@ ISrareer sak g p ctatcesc m uh d topa rortissusc tespe etrficdiddann g efa. lasp asange ta (20 cl@ISp erm ain. Ifs shen bero sakS@p ctatcesarde stherimberoclOhs C hemg w hat isLassNEW bicgstelatr a)9s+5c=100 (b)14s+5c=95 e)14s+5c=120
CHAPTER 2 Budget Constraint 10 Topic: Budget Constraint Diculty: 2 % Correct Responses: 0 Discrimination Index: 0 Correct Answer: B 2.19 Billy Bob wants to gain some weight so that he can play football. Billy eats only milkshakes and spinach. Milkshakes cost him $1 each and spinach costs $2 per serving. A milkshake has 850 calories and a serving of spinach has 200 calories. Billy Bob never spends more than $20 a day on food and he always consumes at least 8000 calories per day. Which of the following is necessarily true? (a) Billy Bob consumes at least 9 milkshakes a day. (b) Billy Bob never consumes more than 6 servings of spinach a day. (c) Billy Bob never consumes positive amounts of both goods. (d) Billy Bob consumes only milkshakes. (e) None of the above. Topic: Budget Constraint Diculty: 2 % Correct Responses: 81 Discrimination Index: 21 Correct Answer: D 2.20 Lars consumes only potatoes and herring. When the price of potatoes was 9 crowns per sack and the price of herring was 5 crowns per crock, he spent his entire income to buy 5 sacks of potatoes and 10 crocks of herring per month. Now the government subsidizes potatoes. Market prices haven't changed, but consumers get a subsidy of 5 crowns for every sack of potatoes consumed. To pay for this subsidy, the government introduced an income tax. Lars pays an income tax of 20 crowns per month. If s is the number of sacks of potatoes and c is the number of crocks of herring, what is Lars's NEW budget equation? (a) 9s + 5c = 100. (b) 14s + 5c = 95. (c) 4s + 5c = 95. (d) 4s + 5c = 75. (e) 14s + 5c = 120