A consumer has 20 dollars. The price of x is 2, and the price of y 1. is 1. (a) Write down the budget constraint. (b) The consumer's income doubles, and the prices of x and y also double. Write down the new budget constraint and draw it. (c) The government subsidizes x by 1 dollar for each unit of sale and taxes on y by 1 dollar for each unit of sale. Write down the new budget constraint and draw it.
A consumer has 20 dollars. The price of x is 2, and the price of y 1. is 1. (a) Write down the budget constraint. (b) The consumer's income doubles, and the prices of x and y also double. Write down the new budget constraint and draw it. (c) The government subsidizes x by 1 dollar for each unit of sale and taxes on y by 1 dollar for each unit of sale. Write down the new budget constraint and draw it.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A consumer has 20 dollars. The price of x is 2, and the price of y
1.
is 1.
(a) Write down the budget constraint.
(b) The consumer's income doubles, and the prices of x and y also double.
Write down the new budget constraint and draw it.
(c) The government subsidizes x by 1 dollar for each unit of sale and taxes
on y by 1 dollar for each unit of sale. Write down the new budget constraint
and draw it.
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