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प्रश्न
Answer the following question:
What is the budget line? Why the budget line is left to right downward sloping?
उत्तर
Budget Line represents the different combinations of two goods that are affordable and are available to a consumer given his/her level of income and the market prices of the goods. The equation of the budget line is represented as follows.
`P_1X_1+P_2X_2 = M - P_1/P_2` represents the slope of budget line. This is also called the price ratio. The negative sign depicts the negative slope of the budget line from left to right.
The budget line slopes downward from left to right because with a given income, a consumer cannot buy a higher amount of both goods. Rather, to increase the purchase of one good, the consumer will have to reduce the purchase of the second good. Thus, the curve slopes downward.
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संबंधित प्रश्न
Define budget set.
Explain the meaning of Budget line.
A consumer buys 200 units of a good at a price of Rs 20 per unit. Price elasticity of deamnd is (–) 2. At what price will he be willing to purchase 300 units? Calculate.
Write a budget line equation of a consumer if the two goods purchased by the consumer, Good X and Good Y are priced at Rs 10 and Rs 5 respectively and the consumer's income is Rs 100.
Find Consumption Expenditure from the following:
|
National Income |
= Rs 5,000 |
|
Autonomous Consumption |
= Rs 1,000 |
|
Marginal propensity to consume |
= 0.80 |
What do you mean by the budget set of a consumer?
What is a budget line?
A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.
How much of good 1 can the consumer consume if he/she spends his/her entire income on that good?
A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.
What is the slope of the budget line?
How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged ?
How does the budget line change if the price of good 2 decreases by a rupee but the price of good 1 and the consumer’s income remain unchanged?
What happens to the budget set if the prices as well as the income double?
Suppose a consumer whose budget is ₹ 500, wants to consume only two goods, Good X and Good Y. The goods are respectively priced at ₹ 50 and ₹ 25.
Answer the following questions on the basis of the given information:
(a) State the budget equation of the consumer.
(b) What is the slope of the budget line?
(c) How many units can she purchase if she spends the entire ₹ 500 on Good X?
(d) How many units can she purchase if she spends the entire ₹ 500 on Good Y, given that the price of good Y has doubled?
Answer the following question.
What can cause a change in the budget line? Explain.
