If all prices and income increase by 10%, then the budget line will: a. rotate around its axis. b. remain unchanged. c. be vertically parallel. d. move inward. e. move outward.
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- given goods A and B and a budget, if the relative price of A were to increase, the budget line would: A. Shift out in parallel fashion. B. Shift in a relative fashion. C. Become steeper. D. Become flatterNow suppose Henry has $900 to spend rather than $450. How will this change affect Henry's budget line? Group of answer choices A.It shifts outward in a parallel fashion. B.It pivots, moving leftward along the horizontal axis and outward along the vertical axis. C.It shifts inward in a parallel fashion D.It does not move.Draw two axes: on the horizontal axis (x-axis), represent the quantity of good x, and on the vertical axis (y-axis), represent the quantity of good y. Plot the initial budget line. The equation for the budget line is m = px * x + py * y. You can rearrange it to solve for y: y = (m - px * x) / py. With given values for m, px, and py, you can plot the line that represents all combinations of goods x and y that the consumer can afford. Plot the indifference curves. These curves represent the combinations of goods x and y that give the consumer the same level of utility. Due to the complexity of the given utility function U(x, y) = xy / (x + y), it may be challenging to plot the exact indifference curves. As an alternative, you can use a simpler utility function for demonstration purposes, such as U(x, y) = x^a * y^b (where a and b are positive constants), which results in easier-to-plot curves. Locate the initial optimal consumption bundle, which is the point where the budget line is…
- If a consumer's income decreases, what will happen to the budget line? It will shift outward. It will become steeper. It will become flatter. It will shift inward.If the price of good X increases, what will happen to the budget line? It will shift outward It will become steeper It will become flatter It will shift inwardWhat happens to the original budget line if the income of the consumer falls by 25%? (i.e., Will there be a change in the slope and/or intercepts of the original budget line? If yes, what are those changes?) Draw the new budget line after the fall in income.
- Suppose that the price of Good X decreases. Which of the following will happen to the budget constraint? Select one: a. It will become flatter. b. It will have the same slope but shift towards the origin. c. It will have the same slope but shift away from the origin. d. It will be become steeper.Consider a user maximizing their utility from two goods.If income were to double, and prices were to also double, the budget line would: a. remain the same. b. rotate inward. c. slant outwards in a parallel pattern d. slant inwards in a parallel patternExplain the meaning of a budget line? B. Explain the effect of the following on the budget line if money income (a) increases and (b) decreases? C. Explain the effect of the following on the budget line if the price of the product shown on the horizontal axis (c) increases and (d) decreases?
- Question 2 If the price of the good on the vertical axis rises a. there will be a parallel shift inward of the budget line. b. there will be a parallel shift outward of the budget line. c. the budget line will become flatter. d. the budget line will become steeper.What happens to the original budget line if the price of good ? falls to 4$? (i.e., Will there be a change in the slope and/or intercepts of the original budget line? If yes, what are those changes?). Interpret economically how the change in the price of good ? affects the consumption decision of the consumer.Suppose the price of A is $2 and the price of B is $3 and that good A is plotted on the horizontal axis. If the price of A doubles and the price of B triples, leaving the consumer's income unchanged, the budget line O will become flatter. O will become steeper. O will shift out from the origin. will be unchanged. will shift in toward the origin.
