Which of the following statements about a budget line is correct? The opportunity cost of the good is represented by the slope of the budget line measured along the x-axis. Consuming more of one thing entails consuming more of the other in terms of budget. The budget line shifts leftward as the consumer's budget increases, but the slope remains unchanged. Because the consumer may afford both things, the slope of the budget line indicates that there is no tradeoff between them. None of the above.

Which of the following statements about a budget line is correct? The opportunity cost of the good is represented by the slope of the budget line measured along the x-axis. Consuming more of one thing entails consuming more of the other in terms of budget. The budget line shifts leftward as the consumer's budget increases, but the slope remains unchanged. Because the consumer may afford both things, the slope of the budget line indicates that there is no tradeoff between them. None of the above.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 25SQ

See similar textbooks

Similar questions

A consumer’s budget set for two goods (X and Y) is 500 ≥ 4X + 5Y.a. The budget set is illustrated below. What are the values of A and B? The horizontal axis is labeled Good X. The vertical axis is labeled Good Y. A line begins at a point on the vertical axis goes down to the right and ends at a point on the horizontal axis. A = B = b. Does the budget set change if the prices of both goods double and the consumer’s income also doubles? multiple choice Yes, it rotates clockwise Yes, it shifts out from the origin Yes, it shifts in toward the origin No, it does not change c. Given the equation for the budget set, what are the prices of the two goods?Good X: $ Good Y: $ What is the consumer’s income? $
True or false. A budget constraint, budget line or budget set is a graphical way to illustrate all possible combinations of two goods that a person can afford.
What can you use to establish whether a budget has been allocated to maximise total utility? Market equilibrium Budget line Consumer equilibrium Marginal utility Total utility
Hector has a budget for bottled water and soda pop. If the price of soda pop decreases, Hector will achieve the same level of satisfaction because his budget has not changed.
Suppose the price of a candy bar is $1.25, the price of a bag of chips is $1.75, and the budget is $17.50. Candy Bars are on the x-axis and bags of chips are on the y-axis. If the price of a candy bar increases to $1.99, what happens to the Budget Line? Group of answer choices a)The budget lines rotates outward b)The budget lines rotates inward c)The budget line undergoes a parallel shift outward d)The budget lines undergoes a parallel shift inward
Revealed Preference is when an individual's behavior reveals information about a person's tastes and preferences,i.e. what he likes and dislikes and how much he likes or dislikes a good. The individual demand schedule and an individual's demand curve reveals a person's tastes and preferences for a good. Specifically it reveals how much each successive unit of the good he consumes is worth to him. We can say this differently by saying the maximum price a person is willing to pay for a particular unit of the good is how much that unit of the good is worth to him. This value is revealed by his behavior or his willingness to voluntarily give a certain amount of money in exchange for that unit of the good. In other words, how many units of a good a person demands/buys at any given price. Look at the images below. multiple choices can be correct. which answers are correct? look at graph.
Revealed Preference is when an individual's behavior reveals information about a person's tastes and preferences,i.e. what he likes and dislikes and how much he likes or dislikes a good. The individual demand schedule and an individual's demand curve reveals a person's tastes and preferences for a good. Specifically it reveals how much each successive unit of the good he consumes is worth to him. We can say this differently by saying the maximum price a person is willing to pay for a particular unit of the good is how much that unit of the good is worth to him. This value is revealed by his behavior or his willingness to voluntarily give a certain amount of money in exchange for that unit of the good. In other words, how many units of a good a person demands/buys at any given price. Look at the image.
Using a budget line, why does a decrease in the price of a good allow one to potentially consume more of both goods?
a) Suppose that an individual consumes two benefits, and achieves the benefit u(x1, x2) by consuming, respectively units of each of the benefits. Define the terms indifference curve and budget constraint, and display the consumer's benefit-maximizing good combination in a chart.Explain why this particular combination solves the benefit maximization problem. b) Suppose that the preferences of the consumer can be expressed by the utility function u(x1, x2) =4x^0,5+x2, and that the price per unit x1 is 1p = 2 , the price per unit x2 is 2p = 5 and that the income (m) is 200.Find the consumer's optimal good choice in this case. c) Show on the basis of the utility given in task (b) that the demand functions for the benefits are provided by 4p m 4p2 og Pi P2 Pi where 1p is the price per unit x1 , p2 is the price per unit x2 and m is the income of the consumer.
Assuming the two good case. When a person is attempting to maximize utility and the price of one of the two goods increases, then: The budget constraint will contract (rotate towards the origin), shifting the budget line inward indicating more choices are now affordable and a lower utility level is now possible. The budget constraint will contract (rotate towards the origin), shifting the budget line outward indicating fewer more are now affordable and a higher utility level is now possible. The budget constraint will contract (rotate towards the origin), shifting the budget line inward indicating fewer choices are now affordable and a lower utility level is now possible.
a) Suppose that an individual consumes two benefits, and achieves the benefit u(x1, x2) by consuming, respectively units of each of the benefits. Define the terms indifference curve and budget constraint, and display the consumer's benefit-maximizing good combination in a chart.Explain why this particular combination solves the benefit maximization problem. b) Suppose that the preferences of the consumer can be expressed by the utility function u(x1, x2) =4x^0,5+x2, and that the price per unit x1 is 1p = 2 , the price per unit x2 is 2p = 5 and that the income (m) is 200.Find the consumer's optimal good choice in this case.
Suppose a consumer has a budget of $200 to spend on two goods, X and Y, whose prices are $20 and $10, respectively. If the consumer is observed to buy 5 units of X and 10 units of Y, where the respective Marginal Utilities of X and Y are, 50 and 40 utils, is the consumer in equilibrium? Explain why or why not. If the consumer is not in equilibrium under conditions in d), suggest another combination that would possibly achieve equilibrium. Explain your answer.