What information do you need to draw your budget line? What is your budget line? What does it show for any pair of goods?
What will be an ideal response?
To draw a budget line for any pair of goods, you need to know your income and the price of each good. The budget line shows all combinations of the two goods that you can afford. The slope of the budget line is the ratio of the prices and shows, therefore, the rate at which the market requires you to give up some of one for more of the other.
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If the demand for a good is elastic, then
A) people do not change the quantity they demand when the price of the good changes. B) a change in price leads to a smaller percentage change in the quantity demanded. C) people substantially decrease the quantity of the good they buy if its price increases by a small percentage. D) a change in the quantity demanded is smaller than the change in price. E) the quantity demanded divided by the price exceeds 1.00.
If the currency drain increases, how can the Fed adjust the monetary base to offset the effect on the quantity of money?
What will be an ideal response?
A decrease in the money supply shifts the aggregate __________ curve to the __________
A) demand; left B) demand; right C) supply; left D) supply; right
Which of the following cost functions will exhibit both decreasing and increasing marginal costs?
A) a cubic cost function B) a quadratic cost function C) a linear cost function D) All of the above