Budget curve and indifference curves

Reference no: EM13698953

Assume consumer equilibrium (budget curve and indifference curves). Draw 3 separate scenarios: (1) the price of good x decreases; (2) the price of good y increases; and (3) the budget (income increases). In each scenario, explain the effect on the graphed lines, on the relative price between the goods, and the final consumption of good x and good y (increases or decrease).

Reference no: EM13698953

Questions Cloud

The cost of eradicating polio : Suppose that the cost of eradicating polio from a society of 1,000 persons is $5 per person. Also suppose that only two persons in that society will benefit from that policy, and the benefit to each of those persons is $2,000. Then what is the social..

Suppose consumer derives satisfaction from consuming tacos : Suppose a consumer derives satisfaction from consuming tacos: those from Taco Bell and those from Chipoltle. Graph the budget line of the consumer under the assumption that he is offered a “buy three, get one free” deal at Taco Bell (limit one free t..

Method of dividing toys ensures-final division is efficient : A parent has a pile of toys to divide between two children. Assume that there is an even number of each toy. What method of dividing the toys ensures that the final division is efficient?

Describe the business and its likely main competitors : Assume that you are going to start a small business of your own. Further, imagine that you are able to adequately differentiate your product, or service so that you can establish your business as a monopolistically competitive firm. Describe the busi..

Budget curve and indifference curves : Assume consumer equilibrium (budget curve and indifference curves). Draw 3 separate scenarios: (1) the price of good x decreases; (2) the price of good y increases; and (3) the budget (income increases). In each scenario, explain the effect on the gr..

income elasticity of demand for Art Deco lawn furniture : Your firm’s research department has estimated the income elasticity of demand for Art Deco lawn furniture to be -0.85. You have just learned that due to an upturn in the economy, consumer incomes are expected to rise by 5 percent next year. How will ..

What sample preparation techniques might you consider using : What samples that should be collected and what sample preparation techniques might you consider using - what type of analysis could be carried out on the samples and using what technique.

What should you do with your stock of inventories : The income elasticity of demand for your firm’s product is estimated to be 0.75. A recent report in The Wall Street Journal says that national income is expected to decline by 3 percent this year. What should you do with your stock of inventories?

Which divisions are efficient : Suppose that one must divide $1,000 among 100 students. Which divisions are efficient?

User Account

All Pages