How will an increase in income affect the budget line for two goods, all other things equal? How does an increase in the price of one good affect the budget line for two goods, all other things equal?
Please provide the best answer for the statement.
A budget line is defined by the intercepts for the two goods in a two-quadrant graph. These intercept values are calculated by dividing money income by the price of the product. If money income increases and prices stay the same, then the intercept values will increase and the budget line will shift outward from the origin. In the case of an increase in the price of one good, the rise in price will reduce the intercept value for that good. The budget line will shift toward the origin along that axis because the new intercept value will be less than the old intercept value for that good.
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A. the law of downward-sloping demand. B. the law of upward-sloping demand. C. the principle of increasing cost. D. complementarity in consumption.
A binding price ceiling causes a shortage in the market
a. True b. False Indicate whether the statement is true or false
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A. it will cause deflation, which the Fed will fight by reducing the growth rate of the money supply. B. it will cause inflation, which the Fed will fight by increasing the growth rate of the money supply. C. it will cause inflation, which the Fed will fight by reducing the growth rate of the money supply. D. it will cause deflation, which the Fed will fight by increasing the growth rate of the money supply.
Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is:
A. $6. B. $12. C. $36. D. $72.