INDICATE WHETHER THE STATEMENT IS TRUE OR FALSE. If there are two goods and the prices...
INDICATE WHETHER THE STATEMENT IS TRUE OR FALSE.
If there are two goods and the prices of both goods rise, then the budget line must become steeper.
A decrease in income pivots the budget line around the bundle initially consumed.
If all prices are doubled and money income is left the same, the budget constraint does not change because relative prices do not change.
If good 1 is on the horizontal axis and good 2 is on the vertical axis, then an increase in the price of good 1 will not change the horizontal intercept of the budget line.
Homework Answers
Statement 1 is false
Statement 2 is false
Statement 3 is false because if all prices are double and money income is left the same the budget line shift inward in a parallel Ray
Statement 4 is true
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INDICATE WHETHER THE STATEMENT IS TRUE OR
FALSE.
If there are two goods and the prices...
Quick intuition check via True or False Questions 1. 2. If all prices double and income...
Quick intuition check via True or False Questions 1. 2. If all prices double and income triples, then the budget line will become steeper There are two goods. You know how much of good 1 a consumer can afford if she spends all of her income on good 1. If you knew the ratio of the prices of the two goods, then you could draw the consumer's budget line without any more information. lf good l is on the horizontal...
Question 14 1 pts Suppose there are two goods: food (horizontal axis) and shelter (vertical axis)....
Question 14 1 pts Suppose there are two goods: food (horizontal axis) and shelter (vertical axis). If income doubles, the price of food doubles, and the price of shelter doubles, then the budget line will be unchanged. budget line will become steeper. budget line will become flatter, budget line will shift outward in a parallel fashion.
3. (3 Points) Intuitively describe what the slope of the budget line tells us about the...
3. (3 Points) Intuitively describe what the slope of the budget line tells us about the consumer's ability to trade goods X and Y. 4. (6 Points) For each description of a change in the budget line given below, state which of the following increases or decreases for the budget constraint variables would cause it: † Px + PxPy. Pytw, and I W. (a) The budget line rotates inward around its horizontal intercept (meaning that it's horizontal intercept does NOT...
4. Suppose a consumer has a budget of S500 to spend on goods X and Z...
4. Suppose a consumer has a budget of S500 to spend on goods X and Z that have prices p, =5 and pz =10. a. Write the equation for the budget constraint. b. Draw the budget line, placing good X on the horizontal axis and Z on the vertical axis. c. What is the slope of the budget constraint line?
4. An individual has preferences over two goods (x and y) that are represented by function...
4. An individual has preferences over two goods (x and y) that are represented by function U = min{x,y}. The individual has income $60, the price of x is $4 and the price of good y is $2. (a) What kind of goods are these to the individual? (i.e. what "special case” is this?) (b) What is this individual's budget constraint? (c) What is this individual's optimal bundle of x and y? [HINT: You can't take the derivative of this...
2. Suppose that Peggy’s marginal rate of substitution of two goods (MRSXY) is greater than the...
2. Suppose that Peggy’s marginal rate of substitution of two goods (MRSXY) is greater than the relative price ratio (Px/Py) in absolute value. Assuming that a diagram of Peggy’s budget constraint reflects the quantities of good Y measured on the vertical axis and quantities of good X measured on the horizontal axis, she will Buy more of good Y and move down the budget line Buy more of good Y and move up the budget line Buy more of good...
How can a budget line shift parallel to itself without a change in income? How can...
How can a budget line shift parallel to itself without a change in income? How can a budget line rotate clockwise without the horizontal intercept changing if the money price of y (the good on the vertical axis) does not change?
Nora consumes only two goods (food and clothing) and her preferences for these goods can be...
Nora consumes only two goods (food and clothing) and her preferences for these goods can be represented by the following utility function UF,C=F2C where F is the quantity of food consumed and C is the amount of clothing consumed respectively. Suppose Nora’s allocated monthly income on the two goods is $M and the prices of the two goods (food and clothing) she prefers are $PF for food and $PC for clothing. Using the above information write Nora’s utility maximization problem...
True/False 25% Indicate whether the statement is true or false 1 Unemployment and inflation are important...
True/False 25% Indicate whether the statement is true or false 1 Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being Economists disagree on most economic issues facing an economy. 2. 3. Individuals will have different value judgments about the appropriate rate of unemployment and the appropriate rate of inflation. The slope of a line with rise of five and run of two is positive. 4. 5. Slope will...
only question that is problem is (i) many thanks . Problem 1 [32 marks] A consumer...
only question that is problem is (i) many thanks .
Problem 1 [32 marks] A consumer has a demand function for good 2, X, that depends on the price of good I. P. the price of good 2. Pz, and income, m, given by xy = 2+ +2P. Initially, assume m= 40, P-1, and P = 2. Then the price of good 2 increases to P = 3. a) What is the total change in demand for good 2? [2...
Quick intuition check via True or False Questions 1. 2. If all prices double and income triples, then the budget line will become steeper There are two goods. You know how much of good 1 a consumer can afford if she spends all of her income on good 1. If you knew the ratio of the prices of the two goods, then you could draw the consumer's budget line without any more information. lf good l is on the horizontal...
Question 14 1 pts Suppose there are two goods: food (horizontal axis) and shelter (vertical axis). If income doubles, the price of food doubles, and the price of shelter doubles, then the budget line will be unchanged. budget line will become steeper. budget line will become flatter, budget line will shift outward in a parallel fashion.
3. (3 Points) Intuitively describe what the slope of the budget line tells us about the consumer's ability to trade goods X and Y. 4. (6 Points) For each description of a change in the budget line given below, state which of the following increases or decreases for the budget constraint variables would cause it: † Px + PxPy. Pytw, and I W. (a) The budget line rotates inward around its horizontal intercept (meaning that it's horizontal intercept does NOT...
4. Suppose a consumer has a budget of S500 to spend on goods X and Z that have prices p, =5 and pz =10. a. Write the equation for the budget constraint. b. Draw the budget line, placing good X on the horizontal axis and Z on the vertical axis. c. What is the slope of the budget constraint line?
4. An individual has preferences over two goods (x and y) that are represented by function U = min{x,y}. The individual has income $60, the price of x is $4 and the price of good y is $2. (a) What kind of goods are these to the individual? (i.e. what "special case” is this?) (b) What is this individual's budget constraint? (c) What is this individual's optimal bundle of x and y? [HINT: You can't take the derivative of this...
True/False 25% Indicate whether the statement is true or false 1 Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being Economists disagree on most economic issues facing an economy. 2. 3. Individuals will have different value judgments about the appropriate rate of unemployment and the appropriate rate of inflation. The slope of a line with rise of five and run of two is positive. 4. 5. Slope will...
only question that is problem is (i) many thanks .
Problem 1 [32 marks] A consumer has a demand function for good 2, X, that depends on the price of good I. P. the price of good 2. Pz, and income, m, given by xy = 2+ +2P. Initially, assume m= 40, P-1, and P = 2. Then the price of good 2 increases to P = 3. a) What is the total change in demand for good 2? [2...
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