Economics | 1.2 Creating and Interpreting a Line Graph

Sarah is going to movies, and she has $10 to spend on snacks. Smoothies are $3, and candy bars are $1 each. She will be spending all of the $10.

Your task: draw a line graph that represents the budget constraints and possible purchasing options that Sarah has with her $10. Use the graphic below and either draw the graph by hand or use Word Art to draw and label the graph. Next, answer the questions that follow.

You will need to include the following:

• Numbers for the X-axis and Y-axis (2 points)
• A line (also called a curve) connecting the points that represent possible purchase combinations. (3 points)

Questions to answer: (Please use complete sentences for full credit - 5 points each.)

• If Sarah decides to purchase two smoothies, how many candy bars will she be able to purchase?
• What is the opportunity cost Sarah faces if she elects to purchase 10 candy bars?
• How could the concept of diminishing marginal utility be illustrated considering Sarah's possible decisions?