If the graph shown represents Celia's budget constraint,which of the following must be true?
A) Celia will spend twice as much on earrings as she does hairbands.
B) Celia could consume either four pairs of earrings or eight hairbands.
C) Celia gets twice as much utility from earrings as she does from hairbands.
D) All of these are true.

Question

If the graph shown represents Celia's budget constraint,which of the following must be true?
A) Celia will spend twice as much on earrings as she does hairbands. 
B) Celia could consume either four pairs of earrings or eight hairbands. 
C) Celia gets twice as much utility from earrings as she does from hairbands. 
D) All of these are true.

Quizplus · Accepted Answer

The graph shows that Celia can consume either four pairs of earrings or eight hairbands, but it doesn't allow us to conclude anything about her preferences or the relative utility that she derives from each good. The graph also doesn't give us any information about the ratio between her spending on earrings and hairbands, so option A is incorrect. Option C is also incorrect since it makes a specific assertion about Celia's preferences that we cannot verify based on the budget constraint graph alone. Therefore, the only choice that must be true based on the given graph is B.

If the Graph Shown Represents Celia's Budget Constraint,which of the Following