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What is the slope of the budget line and how does it impact the consumer's purchasing decisions?
The slope of the budget line represents the rate at which one good can be exchanged for another. A steeper slope indicates a higher opportunity cost of one good in terms of the other. This impacts the consumer's purchasing decisions by showing the trade-off between the two goods - a steeper slope means the consumer has to give up more of one good to get more of the other, influencing their choices based on their preferences and budget constraints.
Why do price changes cause a budget line to pivot while income changes cause a budget line to shift in a parallel line?
Price changes cause a budget line to pivot because they alter the relative price of goods, affecting the trade-off between them while keeping income constant. This results in a change in the slope of the budget line, reflecting the new prices. In contrast, income changes lead to a parallel shift of the budget line because they increase or decrease the consumer's purchasing power uniformly across all goods, maintaining the same trade-off ratio. Thus, the entire budget line moves without changing its slope.
What is the budget line in relation to consumer behaviour?
The budget line represents the combinations of two goods that a consumer can purchase given their income and the prices of those goods. It illustrates the trade-offs a consumer faces when allocating their limited resources, showing the maximum quantity of one good that can be consumed for any given quantity of another. The position and slope of the budget line reflect changes in income and the prices of the goods, influencing consumer choices and preferences. Ultimately, it helps in understanding how consumers make decisions to maximize their utility within their budget constraints.
What is a budget line and how is it useful in reaching consumer equilibrium?
it is a line showing all possible combinations of two goods(goods-1 and good-2) which a consumer can buy with his given money income and the price of the goods prevailing in the market.anywhere on the budget line the consumer spends his entire income on either good1 or good2 or both the goods. each point on the budget line indicates the different combinations of good1 and good2 which a consumer can buy with his income. in indifference curve analysis consumer attains his equilibrium when the slope of price line/budget line is equal to the slope of indifference curve.equilibrium is attained at that point where ic curve is tangent to the price line.....
A horizontal line has an undefined slope?
No, the slope of a horizontal line is 0. The slope of a vertical line is undefined.
What is a slope'?
A smooth line drawn between points on a graph to reflect the general trend.
A change in the slope of a budget line is solely the result of a change in?
A change in the slope of a budget line is solely the result of a change in the consumer preference between two goods (A&B) given the cosumer's money income.
What does budget line show and what are its two basic properties?
Budget line(bl) is tangent to the indifference curve(ic) the slope of bl is same as that of ic.
At the point of consumer equilibrium the slope of the budget line is equal to the?
Marginal rate of substitution
What is the slope of the budget line and how does it impact the consumer's purchasing decisions?
The slope of the budget line represents the rate at which one good can be exchanged for another. A steeper slope indicates a higher opportunity cost of one good in terms of the other. This impacts the consumer's purchasing decisions by showing the trade-off between the two goods - a steeper slope means the consumer has to give up more of one good to get more of the other, influencing their choices based on their preferences and budget constraints.
Why do price changes cause a budget line to pivot while income changes cause a budget line to shift in a parallel line?
Price changes cause a budget line to pivot because they alter the relative price of goods, affecting the trade-off between them while keeping income constant. This results in a change in the slope of the budget line, reflecting the new prices. In contrast, income changes lead to a parallel shift of the budget line because they increase or decrease the consumer's purchasing power uniformly across all goods, maintaining the same trade-off ratio. Thus, the entire budget line moves without changing its slope.
What is the difference between a line with a slope of zero and no slope?
A line with slope of zero is horizontal. A line with no slope is vertical because slope is undefined on a vertical line.
What is the slope of a line perpendicular to a line whose slope is 3?
Slope of a line = m slope of perpendicular line = -1/m
What is the budget line in relation to consumer behaviour?
The budget line represents the combinations of two goods that a consumer can purchase given their income and the prices of those goods. It illustrates the trade-offs a consumer faces when allocating their limited resources, showing the maximum quantity of one good that can be consumed for any given quantity of another. The position and slope of the budget line reflect changes in income and the prices of the goods, influencing consumer choices and preferences. Ultimately, it helps in understanding how consumers make decisions to maximize their utility within their budget constraints.
What is the slope of a line that lies perpendicular to a line with a slope of 1 5?
The line perpendicular to a line with a slope of 1/5 has a slope of -5.
What do you need to use the point slope formula?
The slope of a line and the coordinates of a point on the line.The slope of a line and the coordinates of a point on the line.The slope of a line and the coordinates of a point on the line.The slope of a line and the coordinates of a point on the line.
What is a budget line and how is it useful in reaching consumer equilibrium?
it is a line showing all possible combinations of two goods(goods-1 and good-2) which a consumer can buy with his given money income and the price of the goods prevailing in the market.anywhere on the budget line the consumer spends his entire income on either good1 or good2 or both the goods. each point on the budget line indicates the different combinations of good1 and good2 which a consumer can buy with his income. in indifference curve analysis consumer attains his equilibrium when the slope of price line/budget line is equal to the slope of indifference curve.equilibrium is attained at that point where ic curve is tangent to the price line.....
