Your income is $40. The price of each unit of food is $2, and the price of each unit of clothing...
Question:
Your income is $40. The price of each unit of food is $2, and the price of each unit of clothing is $10. Draw a graph of your budget line. Now, your income rises to $50 and the prices of food and clothing remain the same. Draw a graph of your new budget line Your income is $50. Now, the price of food rises to $4 and the price of clothing remains the same. Draw a graph of your new budget line.
Budget Line:
The budget line refers to the different combinations of two commodities affordable to the consumer when all his income is spent on the purchase of those two commodities. The trade-off between the two goods is reflected in the negatively sloped budget line.
Answer and Explanation: 1
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View this answer1. Your income is $40. The price of each unit of food is $2, and the price of each unit of clothing is $10. Draw a graph of your budget line.
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Budget Lines & the Rate of Transformation in Economics
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Chapter 3 / Lesson 11
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In economics, the rate of transformation model can be used to visualize the concept of budget constraints. Learn more about budget constraints, budgets lines, the rate of transformation curve, and how to maximize the utility of the concepts.
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