The table below shows the scale of preference of a student - Mr Smith whose disposable income is $7.00. Use the information in the table to answer the auest...
Question 1 Report
The table below shows the scale of preference of a student - Mr Smith whose disposable income is $7.00. Use the information in the table to answer the auestoins that follow.
| Items needed | Price ($) |
| Textbook | 5.00 |
| Shirt | 2.00 |
| Shoes | 3.00 |
| Trousers | 3.00 |
| Notebook | 1.00 |
| School fees | 7.00 |
| Mattress | 10.00 |
(a)(i) What will Mr. Smith spend his money on?
(ii) Explain your answer in 2(a)(i).
(b)(i) What is the opportunity cost of Mr. Smith's decision in 2(b)(i)?
(ii) Explain your answer in 2(b)(i).
(c)(i) If Mr. Smith's disposable income increases to $10.0, what will he spend it on?
(ii) What is the opportunity cost of the decision in 2(c)(i)?
(d) Define "scale of preference" and "opportunity cost".
(e) What is the importance of a scale of preference?
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