In Problem 6, suppose that Martha demands a pay raise to fight the inflation. Her boss raises
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In Problem 6, suppose that Martha demands a pay raise to fight the inflation. Her boss raises her salary to $225/wk.
a. Sketch the new budget constraint.
b. What is the opportunity cost of an additional unit of the composite good?
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...
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