A consumer has $1,000 a week to spend on renting square feet of housing (at a price of $5 per square foot) and eating out (at a price of $20 per meal). With square feet of housing on the horizontal and meals on the vertical axis, what is the vertical intercept and what is the slope of this consumer's budget constraint?
What will be an ideal response?
The most meals that can be consumed with $1,000 is 50 per week --- implying a vertical intercept of 50. The most square feet that can be rented with $1,000 per week is 200, implying a horizontal intercept of 200. The slope is then -50/200=-1/4.
You might also like to view...
Which of the following statements about gold jewelry and round-trip bus tickets to Bismarck, North Dakota, is most likely to be correct?
a. They are both inferior goods. b. Their demand curves probably are quite similar. c. They are complements. d. They are substitutes. e. They are unrelated.
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
State the law of diminishing marginal returns
What will be an ideal response?
The consumption of fixed capital in each year's production is called ________.
A. net investment B. depreciation C. indirect business taxes D. inventory reduction