Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 6.A, Problem 8SQ
To determine
The budget line of the consumer.
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Draw two axes: on the horizontal axis (x-axis), represent the quantity of good x, and on the vertical axis (y-axis), represent the quantity of good y. Plot the initial budget line. The equation for the budget line is m = px * x + py * y. You can rearrange it to solve for y: y = (m - px * x) / py. With given values for m, px, and py, you can plot the line that represents all combinations of goods x and y that the consumer can afford. Plot the indifference curves. These curves represent the combinations of goods x and y that give the consumer the same level of utility. Due to the complexity of the given utility function U(x, y) = xy / (x + y), it may be challenging to plot the exact indifference curves. As an alternative, you can use a simpler utility function for demonstration purposes, such as U(x, y) = x^a * y^b (where a and b are positive constants), which results in easier-to-plot curves. Locate the initial optimal consumption bundle, which is the point where the budget line is…
Suppose that the price of Good X decreases. Which of the following will
happen to the budget constraint?
Select one:
a. It will become flatter.
b.
It will have the same slope but shift towards the origin.
c.
It will have the same slope but shift away from the origin.
d. It will be become steeper.
given goods A and B and a budget, if the relative price of A were to increase, the budget line would:
A. Shift out in parallel fashion.
B. Shift in a relative fashion.
C. Become steeper.
D. Become flatter
Chapter 6 Solutions
Economics For Today
Ch. 6.1 - Prob. 1YTECh. 6.1 - Prob. 2YTECh. 6.2 - Prob. 1YTECh. 6.A - Prob. 1SQPCh. 6.A - Prob. 2SQPCh. 6.A - Prob. 3SQPCh. 6.A - Prob. 1SQCh. 6.A - Prob. 2SQCh. 6.A - Prob. 3SQCh. 6.A - Prob. 4SQ
Ch. 6.A - Prob. 5SQCh. 6.A - Prob. 6SQCh. 6.A - Prob. 7SQCh. 6.A - Prob. 8SQCh. 6.A - Prob. 9SQCh. 6.A - Prob. 10SQCh. 6.A - Prob. 11SQCh. 6.A - Prob. 12SQCh. 6.A - Prob. 13SQCh. 6.A - Prob. 14SQCh. 6.A - Prob. 15SQCh. 6 - Prob. 1SQPCh. 6 - Prob. 2SQPCh. 6 - Prob. 3SQPCh. 6 - Prob. 4SQPCh. 6 - Prob. 5SQPCh. 6 - Prob. 6SQPCh. 6 - Prob. 7SQPCh. 6 - Prob. 8SQPCh. 6 - Prob. 9SQPCh. 6 - Prob. 10SQPCh. 6 - Prob. 1SQCh. 6 - Prob. 2SQCh. 6 - Prob. 3SQCh. 6 - Prob. 4SQCh. 6 - Prob. 5SQCh. 6 - Prob. 6SQCh. 6 - Prob. 7SQCh. 6 - Prob. 8SQCh. 6 - Prob. 9SQCh. 6 - Prob. 10SQCh. 6 - Prob. 11SQCh. 6 - Prob. 12SQCh. 6 - Prob. 13SQCh. 6 - Prob. 14SQCh. 6 - Prob. 15SQCh. 6 - Prob. 16SQCh. 6 - Prob. 17SQCh. 6 - Prob. 18SQCh. 6 - Prob. 19SQCh. 6 - Prob. 20SQCh. 6 - Prob. 21SQCh. 6 - Prob. 22SQCh. 6 - Prob. 23SQCh. 6 - Prob. 24SQCh. 6 - Prob. 25SQ
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Similar questions
- If the price of good X increases, what will happen to the budget line? It will shift outward It will become steeper It will become flatter It will shift inwardarrow_forwardFind the attached file.arrow_forwardUsing a budget line, why does a decrease in the price of a good allow one to potentially consume more of both goods?arrow_forward
- Suppose you have a budget of 30 to spend on two goods: pizzas and burgers. Each pizza is $5 while each burger is $10. Suppose you already purchased 6 pizzas. What is the maximum number of burgers that you can buy with the remaining funds in your budget?arrow_forward2. Given the utility function U(x; y)=x²y³, and Px=3 while Py-2, with budget m=100. Measure the MRS, show the budget line and calculate the equilibrium level of consumption for x and y. If the price of y doubles, what is the new level of consumption for both x and y?.arrow_forwardConsider a user maximizing their utility from two goods.If income were to double, and prices were to also double, the budget line would: a. remain the same. b. rotate inward. c. slant outwards in a parallel pattern d. slant inwards in a parallel patternarrow_forward
- suppose you have a fixed income of $3000 per month and you want to allocate your budget between two products: X and Y. Let's say the price of good x is $10 per unit, and the price of good y is $20 per unit. What is the budget constraint? Draw it on a graph and label the intercepts and the slope.arrow_forwardEXAMPLE • Suppose that Ahmed's income OR 2800, and he has to purchase two goods X and Y. The price of good X (Px) is OR 20, and the price of good Y (Py) is OR 40. Draw Ahmed's budget line and find the slope.arrow_forwardOriginally the consumer faces the budget line p1x1 + p2x2 = m.What happens to the budget line if the price of good 2 increases, but the price of good 1 and income remain constant?arrow_forward
- Suppose there are two goods, the prices of both goods are positive, and a consumer's income is also positive. If the consumer's income halves and the price of both goods triple, 4. a. the slope of the consumer's budget line does not change but the budget line shifts outward away from the origin. b. the consumer's budget line gets steeper and shifts outward. c. the slope of the consumer's budget line does not change but the budget line shifts inward toward the origin. d. the consumer's budget line gets flatter and shifts inward.arrow_forwardThe income of a consumer is $40, the price of A is $5, and the price of B is $2. If the quantity of A is measured vertically, then the slope of the budget line is?arrow_forwardSuppose the price of A is $2 and the price of B is $3 and that good A is plotted on the horizontal axis. If the price of A doubles and the price of B triples, leaving the consumer's income unchanged, the budget line O will become flatter. O will become steeper. O will shift out from the origin. will be unchanged. will shift in toward the origin.arrow_forward
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