Economics
Economics
5th Edition
ISBN: 9781319066604
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
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Chapter 10.A, Problem 15P
To determine

Concept introduction:

Budget Line:

It is defined as the combination of all the goods that a consumer can purchase, exhausting all his income. The formula for the budget line is:

Economics, Chapter 10.A, Problem 15P , additional homework tip  1

Here,

  • Economics, Chapter 10.A, Problem 15P , additional homework tip  2is the quantity of good X.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  3is the quantity of good Y.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  4is the total income.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  5is the price of good X.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  6is the price of good Y.

Indifference Curve:

The line that shows the goods providing the same satisfaction level is known as the indifference curve.

The different properties of indifference curve are:

  • Two indifference curve lines never intersect each other.
  • The farther the Indifference Curve is from the origin the more utility it has.
  • Indifference Curve slopes downwards because more is better.
  • Indifference Curve has a convex shape because of the diminishing marginal utility which states tthat marginal utility of an additional unit decreases.

Inferior goods:

It is a type of good in which the demand declines with a rise in income. Example:the demand for potato decreases as income increases because we prefer green vegetables at higher income.

To determine

Concept introduction:

Budget Line:

It is defined as the combination of all the goods that a consumer can purchase, exhausting all his income. The formula for the budget line is:

Economics, Chapter 10.A, Problem 15P , additional homework tip  7

Here,

  • Economics, Chapter 10.A, Problem 15P , additional homework tip  8is the quantity of good X.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  9is the quantity of good Y.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  10is the total income.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  11is the price of good X.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  12is the price of good Y.

Indifference Curve:

The line that shows the goods providing the same satisfaction level is known as the indifference curve.

The different properties of indifference curve are:

  • Two indifference curve lines never intersect each other.
  • The farther the Indifference Curve is from the origin the more utility it has.
  • Indifference Curve slopes downwards because more is better.
  • Indifference Curve has a convex shape because of the diminishing marginal utility which states tthat marginal utility of an additional unit decreases.

Inferior goods:

It is a type of good in which the demand declines with a rise in income. Example:the demand for potato decreases as income increases because we prefer green vegetables at higher income.

To determine

Concept introduction:

Budget Line:

It is defined as the combination of all the goods that a consumer can purchase, exhausting all his income. The formula for the budget line is:

Economics, Chapter 10.A, Problem 15P , additional homework tip  13

Here,

  • Economics, Chapter 10.A, Problem 15P , additional homework tip  14is the quantity of good X.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  15is the quantity of good Y.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  16is the total income.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  17is the price of good X.
  • Economics, Chapter 10.A, Problem 15P , additional homework tip  18is the price of good Y.

Indifference Curve:

The line that shows the goods providing the same satisfaction level is known as the indifference curve.

The different properties of indifference curve are:

  • Two indifference curve lines never intersect each other.
  • The farther the Indifference Curve is from the origin the more utility it has.
  • Indifference Curve slopes downwards because more is better.
  • Indifference Curve has a convex shape because of the diminishing marginal utility which states tthat marginal utility of an additional unit decreases.

Inferior goods:

It is a type of good in which the demand declines with a rise in income. Example:the demand for potato decreases as income increases because we prefer green vegetables at higher income.

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