uppose a person is endowed with Bundle A and the price of X is $10 and the price of Y is $1 on the blue budget line.   Group of answer choices If he sells all the good X he is endowed with, he will move from Bundle A to E. If he sells all the good X he is endowed with, he will move from Bundle A to C. If he sells all the good X he is endowed with, he will move from Bundle A to B. If he sells all the good X he is endowed with, he will move from Bundle A to D.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Suppose a person is endowed with Bundle A and the price of X is $10 and the price of Y is $1 on the blue budget line.

 

Group of answer choices
If he sells all the good X he is endowed with, he will move from Bundle A to E.
If he sells all the good X he is endowed with, he will move from Bundle A to C.
If he sells all the good X he is endowed with, he will move from Bundle A to B.
If he sells all the good X he is endowed with, he will move from Bundle A to D.
The image is a graphical representation used in economics to depict the relationship between two goods, labeled Good X and Good Y, on a coordinate system.

### Axes:
- The vertical axis represents the quantity of Good X.
- The horizontal axis represents the quantity of Good Y.

### Key Points on the Graph:
- **Point A (10,10)**: This point indicates the consumption of 10 units of both Good X and Good Y.
- **Point B**: Positioned on the vertical axis, representing a situation where only Good X is consumed, with no consumption of Good Y.
- **Point E**: Positioned on the horizontal axis, showing a scenario where only Good Y is consumed, with no consumption of Good X.

### Lines and Slopes:
- **Line AB (Yellow)**: Connects points A and B. The slope of this line can indicate the trade-off between Goods X and Y when moving from point B to point A.
- **Line AE (Blue)**: Connects points A and E. This line illustrates another trade-off between the two goods when moving from point A to point E.

### Other Points:
- **Point C**: Located on line AB, indicating a specific combination of Good X and Good Y between points A and B.
- **Point D**: Located on line AE, indicating a specific combination of Good X and Good Y between points A and E.

### Description:
This type of graph is commonly used to illustrate budget constraints and consumer choices. The lines (AB and AE) represent potential combinations of the two goods that a consumer can choose given certain constraints, such as income or prices. The lines are not straight, suggesting differing rates of substitution between the goods, which can be further analyzed for consumer preference patterns.
Transcribed Image Text:The image is a graphical representation used in economics to depict the relationship between two goods, labeled Good X and Good Y, on a coordinate system. ### Axes: - The vertical axis represents the quantity of Good X. - The horizontal axis represents the quantity of Good Y. ### Key Points on the Graph: - **Point A (10,10)**: This point indicates the consumption of 10 units of both Good X and Good Y. - **Point B**: Positioned on the vertical axis, representing a situation where only Good X is consumed, with no consumption of Good Y. - **Point E**: Positioned on the horizontal axis, showing a scenario where only Good Y is consumed, with no consumption of Good X. ### Lines and Slopes: - **Line AB (Yellow)**: Connects points A and B. The slope of this line can indicate the trade-off between Goods X and Y when moving from point B to point A. - **Line AE (Blue)**: Connects points A and E. This line illustrates another trade-off between the two goods when moving from point A to point E. ### Other Points: - **Point C**: Located on line AB, indicating a specific combination of Good X and Good Y between points A and B. - **Point D**: Located on line AE, indicating a specific combination of Good X and Good Y between points A and E. ### Description: This type of graph is commonly used to illustrate budget constraints and consumer choices. The lines (AB and AE) represent potential combinations of the two goods that a consumer can choose given certain constraints, such as income or prices. The lines are not straight, suggesting differing rates of substitution between the goods, which can be further analyzed for consumer preference patterns.
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