For choice sets generated from endowment bundles, the budget line will shift parallel if both prices change by the same proportion.
Answer the following statement true (T) or false (F)
False
Rationale: The slope of the budget remains unchanged --- as does the endowment bundle. Since the budget line always has to pass through the endowment bundle, an simultaneous and proportionate increase in both prices will cause no change in the budget constraint.
You might also like to view...
Social Security is financed:
A. by state income tax revenues. B. by payroll taxes on employees and employers. C. by federal excise taxes. D. out of general tax revenues.
For a perfectly competitive firm, which of the following is NOT true?
A) The average revenue curve, the demand and the marginal revenue curves are identical. B) The total revenue curve begins at the origin and slopes upward as output increases. C) The slope of the total revenue curve is equal to the product price. D) The total revenue curve is horizontal.
In the above figure, the movement from point B to point A might be the result of
A) an increase in government expenditures because of a war. B) an increase in government expenditures because of increases in education expenditures. C) an increase in the demand for manufacturing goods because of new technology. D) a fall in the price level.
Abe can catch 15 pounds of fish an hour or pick 30 pounds of fruit an hour. He works an 8-hour day, spending 5 hours picking fruit and 3 hours catching fish. Calculate Abe's opportunity cost of a pound of fruit
A) 6 minutes B) 3 hours a day C) 2 pounds of fish D) 0.5 pounds of fish