POSSIBILITES, PREFERENCES, AND CHOICES Chapter HOMEWORK (Page 242) - Answer the

Question

POSSIBILITES, PREFERENCES, AND CHOICES Chapter HOMEWORK (Page 242) - Answer the following 4 Questions! (4x2.5=10Marks) 1. What does a household's budget line show? 2. How does the relative price and a household's real income influence its budget line? 3. If a household has an income of $40 and buys only bus rides at $2 each and magazines at S4 each, what is the equation of the household's budget line? 4. If the price of one good changes, what happens to the relative price and the slope of the household's budget line?

Explanation / Answer

1. In simple words, a budget line or budget constraint represents all combinations of goods and services which a customer can afford to buy at the current income level and current prices. Consumers can afford all combinations of goods and services within the budget constraint.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.