Suppose that an individual consumes just hamburgers and soft drinks. Using a carefully-labeled diagram, derive the price-consumption curve that would result from a decrease in the price of hamburgers.
What will be an ideal response?
See Figure 5.11. The initial budget line is given by L1, where the consumer chooses H1 units of hamburgers. A decrease in the price of hamburgers will cause the budget line to pivot to L2. The consumer now chooses to consume H2 units of hamburgers. Connecting the two utility-maximizing bundles yields the price consumption curve.
Economics
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What is the law of diminishing returns? Give a descriptive example
Please provide the best answer for the statement.
Economics
At an exchange rate of $1 = €1 in Figure 36.1, there is
A. Equilibrium in the foreign exchange market. B. A shortage of euros. C. a shortage of dollars. D. A surplus of dollars.
Economics