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Describe in detail, explaining detail, and provide a matching drawing of your own budget constraint.
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- Nick has $300 a month to spend on either detailing his sports car or buying bottles of good wine. It costs $100 to have his car detailed and a bottle of wine is $50. He currently buys four bottles of wine each month and has his car detailed once. If the price of car detailing decreases to $75, Nick's budget constraint will:The slope of the budget constraint cannot change unless the budget amount changes. True or False?A budget constraint, budget set or budget line: 1. Illustrates the combination of units of consumption across two goods that are not affordable, given prices and income. The outer most boundary signifies a person is consuming at a level that exceeds all income. 2. Illustrates the combination of units of consumption across two goods that are unattainable, given prices and income. The outer most boundary signifies a person is consuming at a level that fails to exhaust all income. 3. Illustrates the combination of units of consumption across two goods that are affordable, given prices and income. The outer most boundary signifies a person is consuming at a level that maximizes savings. 4. Illustrates the combination of units of consumption across two goods that are affordable, given prices and income. The outer most boundary signifies a person is consuming at a level that exhausts all income.
- ) x's income Is 500, the price of food is 2 per unit, income is $500, the price of food (F) is $2 per unit, and the price of shelter (S) is $100. Which of the following represents their budget constraint? A) 500 = 100F + 2S B) 500 = 2F + 100S C) S = 500 - 2F D) All of the above.Which of the following statements about a budget line is correct? The opportunity cost of the good is represented by the slope of the budget line measured along the x-axis. Consuming more of one thing entails consuming more of the other in terms of budget. The budget line shifts leftward as the consumer's budget increases, but the slope remains unchanged. Because the consumer may afford both things, the slope of the budget line indicates that there is no tradeoff between them. None of the above.Alex has a budget of $100 a month for movie tickets and restaurant meals. A movie ticket will cost $10 and a restaurant meal costs $20. Which of the following combinations is part of Alex’s budget constraint?
- A student has a monthly budget of $120 to spend on either burrito, which cost $6 each, or sodas, which cost $4 each.Draw the student's budget constraint. Put burritos on the x-axis and sodas on the y-axis. Which combinations of burritos and sodas are unaffordable--those to the left of the line in the graph or those above the line in the graph? Why? Which combinations would leave some budget unspent - those to the left of the line in the above graph or those to the right of the line in the above graph?Assuming the two good case. When a person is attempting to maximize utility and the price of one of the two goods increases, then: a. The budget constraint will expand (rotate away from the origin), shifting the budget line outward indicating fewer choices are now affordable and a lower utility level is now possible. b. The budget constraint will contract (rotate towards the origin), shifting the budget line inward indicating more choices are now affordable and a lower utility level is now possible. c. The budget constraint will contract (rotate towards the origin), shifting the budget line outward indicating fewer more are now affordable and a higher utility level is now possible. d. The budget constraint will contract (rotate towards the origin), shifting the budget line inward indicating fewer choices are now affordable and a lower utility level is now possible.Describe and graph your own example of a budget constraint using two goods (don’t forget to label your axes). In your example, make sure to state what the budget is, the price of the two goods, what the slope of the budget constraint equals (make sure to include the correct sign), and interpret what the slope represents.
- As an economics student your budget for meals at the university is Rs 12,000 and you have two options during the course of you studies: Eating at the university cafeteria for Rs 40 per meal Eating at the dining hall for Rs 10 per meal. a. Draw the budget constraint showing the trade-off between cafeteria and dinning hall meals, with cafeteria meals on x-axis and dining hall meals on y-axis. Assume you spend equal amounts on both goods, draw an indifference curve showing the optimum choice. Label the optimum as point A.Show how the budget constraint affects utility maximization.What can you use to establish whether a budget has been allocated to maximise total utility? Market equilibrium Budget line Consumer equilibrium Marginal utility Total utility