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

International economics., How has the Haberler''s theory of opportunity cos...

How has the Haberler''s theory of opportunity cost an improvement over the classical theory of trade

Primary research methods, We discussed why economists prefer to use availab...

We discussed why economists prefer to use available statistics and econometric techniques over other means of measuring consumer demand. Write a short essay describing a situation

#title.demand curve, Plot the demand schedule and draw the demand curve for...

Plot the demand schedule and draw the demand curve for the data given for Marijuana in the case above.

Economics, Economics- Definition Economics is the study of how societie...

Economics- Definition Economics is the study of how societies utilize limited resources to make valuable commodities and allocate them among diverse people. Microeconomics h

Why international markets tend towards oligopolis structure, Why do so many...

Why do so many international markets tend towards oligopolist structure? Definition of oligopoly - few and large firms with market power Basic assumptions of oligopoly

Investment.., a reduction in investment spending would lead to

a reduction in investment spending would lead to

Demand elasticity analysis, demand elasticity analysis and its significance...

demand elasticity analysis and its significance in pakistan

Production possibility curve, In 1939 the U.S. economy was operating where ...

In 1939 the U.S. economy was operating where in the production possibility curve?

Price responsiveness of supply, On Valentine's Day, the price of roses incr...

On Valentine's Day, the price of roses increases by more than the price of greeting cards.  Why? (Hint: Consider what makes roses and cards different and how that difference might

Estimating Industry Demand for Fresh Market Carrots, this is a project I ne...

this is a project I need help answering the questions

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