The budget line, Microeconomics

Assignment Help:

The Budget Line The line BB gives the persons budget constraint. It is described by the linear equation

c + wl = w;

which can be rewritten as

c = w - wl:

The budget line gives all the consumption-leisure combinations that the person can potentially enjoy with his one unit of time.1 The slope of the budget constraint is given by (the negative of) the wage rate, w. Think about this as representing the relative price of leisure in terms of consumption: if the person desires to enjoy an extra unit of leisure he must sacrifice w in terms of consumption. If the person worked all of his time, so that leisure was zero, then his consumption would be w. This is the vertical intercept of the line. If he did not work, then his leisure would equal one, implying l = 1. He would of course have no consumption, so c = 0. This is the horizontal intercept.

 


Related Discussions:- The budget line

Price Elasticity, About four years ago, Kanye West performed at the UIC Pav...

About four years ago, Kanye West performed at the UIC Pavilion. General admission tickets were priced at $30. Concert promoters say that price elasticity of demand for general admi

Miss, explain how scarcity impacts choice 2.expain the three steps process ...

explain how scarcity impacts choice 2.expain the three steps process in economic analysis

Utility, Lakshani has $5 to spend on pens and pencils. Each pen costs $0.50...

Lakshani has $5 to spend on pens and pencils. Each pen costs $0.50 and each pencil costs $0.10. She is thinking about buying 6 pens and 20 pencils. The last pen would add five time

5 theories of microeconomics, evaluate each in term of strength and weaknes...

evaluate each in term of strength and weakness relative to their applicability to asian economy situation or reality ,2. philippines economy situation or reality

Trade, What are the basis for International Trade?

What are the basis for International Trade?

Cost push or supply inflation, Cost Push or Supply Inflation: It is a...

Cost Push or Supply Inflation: It is a situation where the process of increasing price level is caused by increasing costs of production which push up prices. Cost push infla

Economics, What are the factors that producers in the society may take into...

What are the factors that producers in the society may take into consideration when deciding on the what to produce,how to produce and for whom ?

Long Run Graph Question, If there is an industry and some of the companies ...

If there is an industry and some of the companies get shut down, how would you graph the short run and long run effects

Marginal utility theory, discuss whether marginal utility is a realistic pi...

discuss whether marginal utility is a realistic piece of economy analysis in a consumer demand

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd