Suppose you only consume food and clothing, and clothing is plotted on the vertical axis. Also, you purchase food at a fixed price (PF), but the price of clothing declines as you buy in larger quantities (i.e., quantity discounts)
What does the budget line look like in this case? A) The budget line is a straight line
B) The budget line is now concave to (bows out from) the origin
C) The budget line is now convex to (bows in toward) the origin
D) The budget line will not be a straight line, but it may be concave or convex
C
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Which of the following does not explain why consumers buy products that many other consumers are already buying?
A) cost-effective way to gather information about a product B) the satisfaction people derive by being viewed as "fashionable" C) differences in tastes and preferences D) technology
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and current international transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and current international transactions become more positive (or less negative). b. The quantity of real loanable funds per time period rises, and current international transactions become more negative (or less positive). c. The quantity of real loanable funds per time period and current international transactions remain the same. d. The quantity of real loanable funds per time period rises, and current international transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.