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

Assume the United States is a large consumer of steel, able to influence the world price. DUS and SUS denote its demand and supply schedules in Figure 1. The overall (United States plus world) supply schedule of steel is denoted by SUS.+W. Figure 1 Import Tariff Levied by a Large Country Answer all questions (a-f) by referring to Figure 1 above. a) Calculate the free trade market equilibrium price, domestic consumption, and volumE Answer all questions (a-f) by referring to Figure 1 above. a) Calculate the free trade market equilibrium price, domestic consumption, and volume of steel imports by the US. [5 marks] b) Suppose the United States imposes a tariff (t) of $100 on each ton of steel imported. With the tariff, calculate the price of steel and the volume of steel imports by the US. [5 marks] c) Of the $100 tariff, how much is passed on to the US consumer via a higher price, and how much is borne by the foreign exporter? [5 marks] d) Calculate the tariff's deadweight welfare loss to…

1. A doctor quits his job, which pays $77,000 per annum, to open a non-governmental organization (NGO) to serve the needs of orphans. His annual expenses for the NGO amounts to $62,700 for food and daily supplies, $9,400 for maintenance, and $1,800 for books. What is his opportunity cost of opening the NGO? (Show working) 2. During the COVID-19 pandemic, hospitals worldwide faced severe resource constraints, including: a. Limited ICU beds b. Shortage of ventilators c. Insufficient doctors and nurses d. Lack of vaccines in early 2021 Governments and hospitals had to make critical decisions about who receives treatment first and how to allocate limited resources efficiently. In no more than 150 words and using core economic concepts of scarcity, choice and opportunity cost, how would you help your government make these critical decisions?

What is the argument about necessary evil?

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