Juice 20 13 5 710 20 40 Snacks 19) The above figure shows Bobby\'s indifference

Question

Juice 20 13 5 710 20 40 Snacks 19) The above figure shows Bobby's indifference map for juice and snacks. Also shown are three budget lines resulting from different prices for snacks. As the price of snacks rises, Bobby's utility A) increases. @ decreases. C) stays the same. D) might change, but there is not enough information to determine. 20) The above figure shows Bobby's indifference map for juice and snacks. Also shown are three budget li resulting from different prices for snacks. Bobby's demand for snacks is A) unit elastic. B) perfectly elastic. inelastic. D) elastic.

Explanation / Answer

Q19 Answer is B. Decreases. Explanation: As the price of snacks rises, it is observed that the quantity demanded of both the products reduces. Hence, the utility decreases for consumption of lesser quantiity of both the products. Q20. Answer is C. Inelastic. Explanation: The Price of Snacks has been doubled (as quantity purchased from budget line reduced to half with each increasses) However, the Quantity demanded of snacks has been reduced in lesser proportion than price. Hence, demand is inelastic.

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