If the budget line shifts from BB to bb in the above diagram we can infer that the:
A) price of Y has increased and the price of X has decreased.
B) price of Y has decreased and the price of X has increased.
C) prices of both X and Y have increased.
D) prices of both X and Y have decreased.
Ans: A) price of Y has increased and the price of X has decreased.
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A) when demand is elastic, marginal revenue is positive and when demand is inelastic, marginal revenue is negative. B) whenever the elasticity is positive, marginal revenue is positive. C) whenever the elasticity is negative, marginal revenue is positive. D) when demand is elastic, marginal revenue is negative and when demand is inelastic, marginal revenue is positive. E) that total revenue equals zero at the quantity for which the demand is unit elastic.