BuyFindarrow_forward

Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040

Solutions

Chapter
Section
BuyFindarrow_forward

Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040
Chapter 6.A, Problem 8SQ
Textbook Problem
3 views

The equation for a budget line for goods X and Y, with Px being the price of X, Py being the price of Y, and B being the budget, can be written as

  1. a. PxX + PyY = B.
  2. b. PxX + PyY = 1/B.
  3. c. PxX = B + PyY.
  4. d. PxX/PyY = 1 – B.

To determine

 The budget line of the consumer.

Explanation of Solution

The budget line indicates all the combinations of the two commodities that the consumer can consume with the given income and the price levels within the level of income.

Option (a):

The budget is the income of the consumer and the different combinations of the two commodities that the consumer can consume with the income is indicated by the budget line. Thus, the price of the good multiplied with the quantity of the good is added to the price multiplied with the quantity of the second good to give the total budget of the consumer at any point on the budget line. This means that option 'a' is correct.

Option (b):

The price of the good multiplied with the quantity of the good is added to the price multiplied with the quantity of the second good to give the total budget of the consumer at any point on the budget line. Thus, it does not give 1/B. Therefore, option 'b' is incorrect...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 6 Solutions

Economics For Today
Show all chapter solutions
add
Ch. 6.A - Consumer equilibrium occurs where the budget line...Ch. 6.A - An indifference curve consists of quantity...Ch. 6.A - The slope of an indifference curve is equal to the...Ch. 6.A - The equation for a budget line for goods X and Y,...Ch. 6.A - Given the budget line and indifference curves...Ch. 6.A - Given the budget line and indifference curves...Ch. 6.A - An indifference curve has a negative slope because...Ch. 6.A - The marginal rate of substitution ____________ as...Ch. 6.A - Assume Px is the price of good X on the horizontal...Ch. 6.A - As shown in Exhibit A-7, the marginal rate of...Ch. 6.A - As shown in Exhibit A-7, movement from consumer...Ch. 6 - Does a dollar given to a rich person raise the...Ch. 6 - Do you agree with the following statement? If you...Ch. 6 - This week you have gone to two parties. Assume the...Ch. 6 - Suppose your marginal utility for meals at the...Ch. 6 - Suppose you consume 3 pounds of beef and 5 pounds...Ch. 6 - Suppose the marginal utility of a Coke is 15 utils...Ch. 6 - Explain the relationship between the law of...Ch. 6 - Consider the following table, which lists Jamess...Ch. 6 - Using the marginal utility schedule in question 8,...Ch. 6 - Suppose the price of a BMW falls. Explain the law...Ch. 6 - The term utility refers to the a. usefulness of a...Ch. 6 - When total utility is at a maximum, marginal...Ch. 6 - The marginal utilities associated with the first 4...Ch. 6 - Generally speaking, as more of a particular good...Ch. 6 - Marginal utility is defined as the a. extra...Ch. 6 - The statement As more of a good is consumed, the...Ch. 6 - The law of diminishing marginal utility indicates...Ch. 6 - EXHIBIT 4 Marginal Utility for Data for Clothes...Ch. 6 - Refer to Exhibit 4. Your budget is 50. The price...Ch. 6 - Refer to Exhibit 4. Clothes and amusements are...Ch. 6 - Total utility is maximized in the consumption of...Ch. 6 - The MU/P equalization principle means consumers...Ch. 6 - When the price of a good falls, consumers may...Ch. 6 - When the price of a good falls, consumers buy more...Ch. 6 - When the price of a normal good falls, a. both the...Ch. 6 - If utility is not maximized, a. some change in...Ch. 6 - A utility-maximizing consumer would never purchase...Ch. 6 - Diminishing marginal utility means that as you...Ch. 6 - Assume that an individual consumes only hot dogs...Ch. 6 - Assume the price of Coca-Cola increases. As a...Ch. 6 - When the price of a good rises, one effect of this...Ch. 6 - According to the utility model of consumer demand,...Ch. 6 - As shown in Exhibit 5, assume that the price of...Ch. 6 - As shown in Exhibit 5, assume that the price of...Ch. 6 - As shown in Exhibit 5, assume that the price of...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
Explain the relationship among saving, investment, and net capital outflow.

Brief Principles of Macroeconomics (MindTap Course List)

What would happen to the U.S. standard of living if people lost faith in the safety of the financial institutio...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)