The cause for a parallel shift in the budget constraint.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 21, Problem 1CQQ

To determine

The cause for a parallel shift in the budget constraint.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Option (d):

The budget constraint is the constraint which is due to the budget of the individual. The human wants and needs are unlimited and when the budget of the individual is not unlimited, it will lead to the constraint of needs and this constraint raised due to the limited budget is known as the budget constraint of the individual. Thus, a budget constraint will represent all the possible combinations of two commodities that an individual can consume at the given market prices and with all his income in hand.

Here, the budget of the consumer is $100, the price of pizza is $10 and that of soda is $2. Thus, the consumer can buy 10 pizzas and no soda or 50 sodas and no pizza when the whole income is spend on either of the commodities only. When the price of any one increases or decreases, it will lead to the shift in the intercept of the budget constraint which represents that commodity, in order to have a parallel shift outwards, the price of both the commodities should double and the total income of the consumer should increase by four times. Since option 'd' gives such values, option 'd' is correct.

Option (a):

When price of the items falls to half of the previous level along with the income, there will be no change in the quantities demanded and thus there will be no shift in the budget constraint which means that option 'a' is incorrect.

Option (b):

When price of the items increases to twice of the previous level and the income remains the same, there will be a decline in the quantities demanded and thus there will an inward shift in the budget constraint which means that option 'b' is incorrect.

Option (c):

When there is an increase in the income to $120 and the decrease in the price levels of soda to $1 and the pizza to $8 take place, these will lead to an unparallel shift in the budget constraint which means that the option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Budget constraint: It represents all the combinations of two goods that the consumer can consume with the given price level and the income in the hands of the individual.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Labor Market Data Price $5 $10 $15 $20 $25 3,000,000 6,000,000 9,000,000 12,000,000 15,000,000 Qd 15,000,000 12,000,000 9,000,000 6,000,000 3,000,000 Price $30 $25 $20 $15 $10 $5 + +- x- 3 6 Do + + F 9 12 15 Quantity (In millions) Area of a triangle = 1/2* base *height Market Efficiency & Total Surplus Worth Publishers SCENARIO: The state government is considering raising the minimum wage from $15 per hour to $20 per hour over the next 3 years. As an economic advisor to the governor, you have been asked to provide a recommendation on whether the minimum wage should be increased based on economic theory. Consider the labor market data provided. Prepare a brief report that: 1. Explains whether the labor market is currently efficient at the equilibrium wage of $15 per hour. How would you know? At equilibrium, what (dollar amount) is the Total Surplus this market provides? Show your rationale with numbers. 2. Analyzes the impact on total surplus in the market if the minimum wage is raised…

Draw the IS-LM diagram at equilibrium and use it to show how one or both of the curves change based on the following exogenous changes. An increase in taxes. An increase in the money supply An increase in government purchases

Don't use Ai. Answer in step by step with explanation.

Answer 2

Question

Chapter 21, Problem 1CQQ

To determine

The cause for a parallel shift in the budget constraint.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Option (d):

The budget constraint is the constraint which is due to the budget of the individual. The human wants and needs are unlimited and when the budget of the individual is not unlimited, it will lead to the constraint of needs and this constraint raised due to the limited budget is known as the budget constraint of the individual. Thus, a budget constraint will represent all the possible combinations of two commodities that an individual can consume at the given market prices and with all his income in hand.

Here, the budget of the consumer is $100, the price of pizza is $10 and that of soda is $2. Thus, the consumer can buy 10 pizzas and no soda or 50 sodas and no pizza when the whole income is spend on either of the commodities only. When the price of any one increases or decreases, it will lead to the shift in the intercept of the budget constraint which represents that commodity, in order to have a parallel shift outwards, the price of both the commodities should double and the total income of the consumer should increase by four times. Since option 'd' gives such values, option 'd' is correct.

Option (a):

When price of the items falls to half of the previous level along with the income, there will be no change in the quantities demanded and thus there will be no shift in the budget constraint which means that option 'a' is incorrect.

Option (b):

When price of the items increases to twice of the previous level and the income remains the same, there will be a decline in the quantities demanded and thus there will an inward shift in the budget constraint which means that option 'b' is incorrect.

Option (c):

When there is an increase in the income to $120 and the decrease in the price levels of soda to $1 and the pizza to $8 take place, these will lead to an unparallel shift in the budget constraint which means that the option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Budget constraint: It represents all the combinations of two goods that the consumer can consume with the given price level and the income in the hands of the individual.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 21, Problem 1CQQ

To determine

The cause for a parallel shift in the budget constraint.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Option (d):

The budget constraint is the constraint which is due to the budget of the individual. The human wants and needs are unlimited and when the budget of the individual is not unlimited, it will lead to the constraint of needs and this constraint raised due to the limited budget is known as the budget constraint of the individual. Thus, a budget constraint will represent all the possible combinations of two commodities that an individual can consume at the given market prices and with all his income in hand.

Here, the budget of the consumer is $100, the price of pizza is $10 and that of soda is $2. Thus, the consumer can buy 10 pizzas and no soda or 50 sodas and no pizza when the whole income is spend on either of the commodities only. When the price of any one increases or decreases, it will lead to the shift in the intercept of the budget constraint which represents that commodity, in order to have a parallel shift outwards, the price of both the commodities should double and the total income of the consumer should increase by four times. Since option 'd' gives such values, option 'd' is correct.

Option (a):

When price of the items falls to half of the previous level along with the income, there will be no change in the quantities demanded and thus there will be no shift in the budget constraint which means that option 'a' is incorrect.

Option (b):

When price of the items increases to twice of the previous level and the income remains the same, there will be a decline in the quantities demanded and thus there will an inward shift in the budget constraint which means that option 'b' is incorrect.

Option (c):

When there is an increase in the income to $120 and the decrease in the price levels of soda to $1 and the pizza to $8 take place, these will lead to an unparallel shift in the budget constraint which means that the option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Budget constraint: It represents all the combinations of two goods that the consumer can consume with the given price level and the income in the hands of the individual.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 21, Problem 1CQQ

To determine

The cause for a parallel shift in the budget constraint.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Option (d):

The budget constraint is the constraint which is due to the budget of the individual. The human wants and needs are unlimited and when the budget of the individual is not unlimited, it will lead to the constraint of needs and this constraint raised due to the limited budget is known as the budget constraint of the individual. Thus, a budget constraint will represent all the possible combinations of two commodities that an individual can consume at the given market prices and with all his income in hand.

Here, the budget of the consumer is $100, the price of pizza is $10 and that of soda is $2. Thus, the consumer can buy 10 pizzas and no soda or 50 sodas and no pizza when the whole income is spend on either of the commodities only. When the price of any one increases or decreases, it will lead to the shift in the intercept of the budget constraint which represents that commodity, in order to have a parallel shift outwards, the price of both the commodities should double and the total income of the consumer should increase by four times. Since option 'd' gives such values, option 'd' is correct.

Option (a):

When price of the items falls to half of the previous level along with the income, there will be no change in the quantities demanded and thus there will be no shift in the budget constraint which means that option 'a' is incorrect.

Option (b):

When price of the items increases to twice of the previous level and the income remains the same, there will be a decline in the quantities demanded and thus there will an inward shift in the budget constraint which means that option 'b' is incorrect.

Option (c):

When there is an increase in the income to $120 and the decrease in the price levels of soda to $1 and the pizza to $8 take place, these will lead to an unparallel shift in the budget constraint which means that the option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Budget constraint: It represents all the combinations of two goods that the consumer can consume with the given price level and the income in the hands of the individual.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 21, Problem 1CQQ

To determine

The cause for a parallel shift in the budget constraint.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Option (d):

The budget constraint is the constraint which is due to the budget of the individual. The human wants and needs are unlimited and when the budget of the individual is not unlimited, it will lead to the constraint of needs and this constraint raised due to the limited budget is known as the budget constraint of the individual. Thus, a budget constraint will represent all the possible combinations of two commodities that an individual can consume at the given market prices and with all his income in hand.

Here, the budget of the consumer is $100, the price of pizza is $10 and that of soda is $2. Thus, the consumer can buy 10 pizzas and no soda or 50 sodas and no pizza when the whole income is spend on either of the commodities only. When the price of any one increases or decreases, it will lead to the shift in the intercept of the budget constraint which represents that commodity, in order to have a parallel shift outwards, the price of both the commodities should double and the total income of the consumer should increase by four times. Since option 'd' gives such values, option 'd' is correct.

Option (a):

When price of the items falls to half of the previous level along with the income, there will be no change in the quantities demanded and thus there will be no shift in the budget constraint which means that option 'a' is incorrect.

Option (b):

When price of the items increases to twice of the previous level and the income remains the same, there will be a decline in the quantities demanded and thus there will an inward shift in the budget constraint which means that option 'b' is incorrect.

Option (c):

When there is an increase in the income to $120 and the decrease in the price levels of soda to $1 and the pizza to $8 take place, these will lead to an unparallel shift in the budget constraint which means that the option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Budget constraint: It represents all the combinations of two goods that the consumer can consume with the given price level and the income in the hands of the individual.

Answer 6

Chapter 21, Problem 1CQQ

To determine

The cause for a parallel shift in the budget constraint.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Option (d):

The budget constraint is the constraint which is due to the budget of the individual. The human wants and needs are unlimited and when the budget of the individual is not unlimited, it will lead to the constraint of needs and this constraint raised due to the limited budget is known as the budget constraint of the individual. Thus, a budget constraint will represent all the possible combinations of two commodities that an individual can consume at the given market prices and with all his income in hand.

Here, the budget of the consumer is $100, the price of pizza is $10 and that of soda is $2. Thus, the consumer can buy 10 pizzas and no soda or 50 sodas and no pizza when the whole income is spend on either of the commodities only. When the price of any one increases or decreases, it will lead to the shift in the intercept of the budget constraint which represents that commodity, in order to have a parallel shift outwards, the price of both the commodities should double and the total income of the consumer should increase by four times. Since option 'd' gives such values, option 'd' is correct.

Option (a):

When price of the items falls to half of the previous level along with the income, there will be no change in the quantities demanded and thus there will be no shift in the budget constraint which means that option 'a' is incorrect.

Option (b):

When price of the items increases to twice of the previous level and the income remains the same, there will be a decline in the quantities demanded and thus there will an inward shift in the budget constraint which means that option 'b' is incorrect.

Option (c):

When there is an increase in the income to $120 and the decrease in the price levels of soda to $1 and the pizza to $8 take place, these will lead to an unparallel shift in the budget constraint which means that the option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Budget constraint: It represents all the combinations of two goods that the consumer can consume with the given price level and the income in the hands of the individual.

Answer 7

Chapter 21, Problem 1CQQ

To determine

The cause for a parallel shift in the budget constraint.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option (d):

The budget constraint is the constraint which is due to the budget of the individual. The human wants and needs are unlimited and when the budget of the individual is not unlimited, it will lead to the constraint of needs and this constraint raised due to the limited budget is known as the budget constraint of the individual. Thus, a budget constraint will represent all the possible combinations of two commodities that an individual can consume at the given market prices and with all his income in hand.

Here, the budget of the consumer is $100, the price of pizza is $10 and that of soda is $2. Thus, the consumer can buy 10 pizzas and no soda or 50 sodas and no pizza when the whole income is spend on either of the commodities only. When the price of any one increases or decreases, it will lead to the shift in the intercept of the budget constraint which represents that commodity, in order to have a parallel shift outwards, the price of both the commodities should double and the total income of the consumer should increase by four times. Since option 'd' gives such values, option 'd' is correct.

Option (a):

When price of the items falls to half of the previous level along with the income, there will be no change in the quantities demanded and thus there will be no shift in the budget constraint which means that option 'a' is incorrect.

Option (b):

When price of the items increases to twice of the previous level and the income remains the same, there will be a decline in the quantities demanded and thus there will an inward shift in the budget constraint which means that option 'b' is incorrect.

Option (c):

When there is an increase in the income to $120 and the decrease in the price levels of soda to $1 and the pizza to $8 take place, these will lead to an unparallel shift in the budget constraint which means that the option 'c' is incorrect.

Answer 12

Economics Concept Introduction

Concept introduction:

Budget constraint: It represents all the combinations of two goods that the consumer can consume with the given price level and the income in the hands of the individual.

Answer 13

Ch. 21.1 - Prob. 1QQ Ch. 21.2 - Prob. 2QQ Ch. 21.3 - Prob. 3QQ Ch. 21.4 - Prob. 4QQ Ch. 21 - Prob. 1CQQ Ch. 21 - Prob. 2CQQ Ch. 21 - Prob. 3CQQ Ch. 21 - Prob. 4CQQ Ch. 21 - Prob. 5CQQ Ch. 21 - Prob. 6CQQ

The cause for a parallel shift in the budget constraint.

The cause for a parallel shift in the budget constraint.

Answer to Problem 1CQQ

Explanation of Solution

Want to see more full solutions like this?

Chapter 21 Solutions