Joe spends $72 on gasoline and sandwiches. The price of a gallon of gasoline is $3 and a sandwich is $4
Placing the quantity of sandwiches on the left side, what is Joe's budget equation? If sandwiches are measured on the vertical axis, what is the slope of Joe's budget line?
The budget equation is QS = 18 - 0.75QG, where QS is the quantity of sandwiches and QG is the quantity of gasoline. To determine the slope of Joe's budget line, first notice that Joe's budget line intersects the vertical axis when Joe buys 18 sandwiches (which equals his income, $72, divided by the price of a sandwich, $4). Second, Joe's budget line intersects the horizontal axis when he buys 24 gallons of gasoline (which equals his income, $72, divided by the price of a gallon of gasoline, $3). So calculating the slope of Joe's budget line over the horizontal distance from 0 gallons of gasoline to 24 gallons of gasoline, the slope equals the vertical fall is -18 sandwiches divided by the horizontal distance of 24 gallons of gasoline, so the budget line's slope of -18 sandwiches/24 gallons of gasoline, which is -0.75 of a sandwich per gallon of gasoline.
You might also like to view...
In the above figure, a(n) ________ would be set ________
A) effective minimum wage; above $6.00. B) union wage; above $9.00 but would not affect the natural rate of unemployment. C) efficiency wage; below $9.00 D) efficiency wage; above $6.00. E) efficiency wage; above $9.00 and would increase the natural rate of unemployment
Which of the following individuals will the Bureau of Labor Statistics not count as unemployed?
A) Those who are not eligible for unemployment compensation because they have not worked in covered employment. B) Those who have turned down job offers comparable to the most recent one they held. C) Those who have used up their unemployment compensation benefits. D) Those who live in a household where at least one other person is employed full time. E) None of the above prevents an individual from being counted as unemployed.