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5. Oftentimes, we reduce a complex economy to a two-good economy by specifying one particular good and combining all other goods into a numeralre good
5. Oftentimes, we reduce a complex economy to a two-good economy by specifying one particular good and combining all other goods into a "numeralre" good that can be Interpreted as "everything else" on which the Individual spends money. Let us consider the market for Netflix streaming-movies and "everything else". Netflix costs a fixed $8 per month after which an individual can stream as many movies as she would like for free. Assume a unit of "everything else" costs $4 and an individual has $24 to spend on Netflix movies and everything else. Which of the following accurately portrays her budget line if she signs up for Netflix? A B Budget Line 3 Netflix Movies Netflix Movies Budget Line 5 7 8 9 10 Everything Else Everything Else C D 10 Budget Line Budget Line Netflix Movies Netflix Movies 1 2 3 10 Everything Else Everything Else
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