Abby, Bobbi, and Deborah each buy ice cream and paperback novels to enjoy on hot summer days. Ice cream costs $5 per gallon, and paperback novels cost $8 each. Abby has a budget of $80, Bobbi has a budget of $60, and Deborah has a budget of $40 to spend on ice cream and paperback novels. Which of the following statements is correct?
A)Each woman faces the same budget constraint.
B)The slope of the budget constraint is the same for each woman.
C)The area underneath the budget constraint is larger for Deborah than for Abby.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

While each woman has a different budget, they all face the same slope of the budget constraint because the price of ice cream and paperback novels is the same for each of them. Choice A is incorrect because each woman has a different budget, and choice C is incorrect because we do not have enough information to determine the area underneath each woman's budget constraint.

Abby, Bobbi, and Deborah Each Buy Ice Cream and Paperback