Suppose that your grandmother gave you 4 polo shirts and 2 pairs of jeans for your...

 

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Suppose that your grandmother gave you 4 polo shirts and 2 pairs of jeans for your birthday, and you are deciding whether or not to keep the gift or exchange it for a different combination of polo shirts and jeans. Unfortunately, you did not get a gift receipt for the items, so the only way to return the clothing is to receive store credit for their current price. A week later you head to the store to check out the current prices of polo shirts and jeans. It turns out that jeans are priced at $20 per pair and polo shirts are priced at $40 per polo shirt. On the following graph, use the blue line (circle symbol) to graph your budget constraint (BC), given these prices. Then, use the black point (plus symbol) to indicate your endowment of jeans and polo shirts. mework Ch 02: A Consumer's Economic Circumstances 10 Initial BC 7. Endowment New BC 10 JEANS Suppose you decided not to return any of the polo shirts or jeans you received for your birthday at the prices of $20 per pair of jeans and $40 per polo shirt. A month has passed, and you decide to check out the store again. Now, the price of jeans has increased to $30 and the price of a polo shirt has decreased to $30. On the previous graph, use the green line (triangle symbol) to graph the new budget constraint, given these prices. True or False: The opportunity cost of a pair of jeans, in terms of polo shirts, has increased because of the change in prices. POLO SHIRTS Suppose that your grandmother gave you 4 polo shirts and 2 pairs of jeans for your birthday, and you are deciding whether or not to keep the gift or exchange it for a different combination of polo shirts and jeans. Unfortunately, you did not get a gift receipt for the items, so the only way to return the clothing is to receive store credit for their current price. A week later you head to the store to check out the current prices of polo shirts and jeans. It turns out that jeans are priced at $20 per pair and polo shirts are priced at $40 per polo shirt. On the following graph, use the blue line (circle symbol) to graph your budget constraint (BC), given these prices. Then, use the black point (plus symbol) to indicate your endowment of jeans and polo shirts. mework Ch 02: A Consumer's Economic Circumstances 10 Initial BC 7. Endowment New BC 10 JEANS Suppose you decided not to return any of the polo shirts or jeans you received for your birthday at the prices of $20 per pair of jeans and $40 per polo shirt. A month has passed, and you decide to check out the store again. Now, the price of jeans has increased to $30 and the price of a polo shirt has decreased to $30. On the previous graph, use the green line (triangle symbol) to graph the new budget constraint, given these prices. True or False: The opportunity cost of a pair of jeans, in terms of polo shirts, has increased because of the change in prices. POLO SHIRTS

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Part 1 True Explanation The opportunity cost of a pair of j... View the full answer