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A Budget constraint represents the combinations of goods and services that a consumer can purchase given current prices with his or her income. Consumer theory uses the concepts of a budget constraint and a preference map to analyze consumer choices. Both concepts have a ready graphical representation in the two-good case. Budget constraint, where andUsesIndividual choiceAn individual consumer will choose to consume goods at the point where the most preferred available indifference curve on their preference map is tangent to their budget constraint. All two dimensional budget constraints are generalized into the equation: Pxx + Pyy = m m = money income allocated to consumption (after saving and borrowing) Px = the price of a specific good Py = the price of all other goods x = amount purchased of a specific good y = amount purchased of all other goods The equation can be rearraged to represent the shape of the curve on a graph: y = (m / Py) − (Px / Py)x, where (m / Py) is the y-intercept and ( − Px / Py) is the slope, representing a downward sloping budget line. The factors that can shift the budget line are a change in income (m), a change in the price of a specific good (Px), or a change in the price of all other goods (Py). From Wikipedia under the
GNU Free Documentation License Is the budget line in terms of economics useful in illustrating the notion of opportunity cost? Q. Is the budget line in terms of economics useful in illustrating the notion of opportunity cost? Asked by ashl2121 - Mon Oct 22 14:50:35 2007 - - 1 Answers - 0 Comments A. Yes. The equation of the budget line is derived by first expressing that the consumer's income (M) equals his expenditure on good x (the price of x, denoted Px, times the quantity of x, denoted X) plus his expenditure on good y (the price of y, denoted Py, times the quantity of y, denoted Y) as follows: M=PxX+PyY In order to write the equation of this constraint in intercept-slope form where the quantity of y is measured on the vertical axis and the quantity x is measured on the horizontal axis it is algebraically rearranged to yield: Y=(M/Py)-(Px/Py)X Note that the slope of this line is -Px/Py, which measures the opportunity cost of purchasing another unit of x. For example, if Px=$3/unit of x and Py=$2/unit of y, then the slope of… [cont.] Answered by helper - Mon Oct 22 15:02:43 2007 The slope of the budget line stays the same when :? Q. The slope of the budget line stays the same when : a) income increases b) income decreases c) the prices of both goods increase proportionately d) the prices of both goods decrease proportionately e) all of the above. Please explain the right answer. Asked by Discover.... - Mon Jul 13 22:17:19 2009 - - 1 Answers - 0 Comments 5) Define a budget line. What would you say about its slope?
Q. 5)Define a budget line. What would you say about its slope? from fundamental of economics. Asked by Miswer K - Sat May 16 11:39:28 2009 - - 1 Answers - 0 Comments A. Budget line is the line drawn from ones pocket up to drain.Slope depends on the height of the person and the drain location.. Answered by Chandrashekar Parampalli - Sun May 17 06:57:53 2009 From Yahoo Answer Search: "budget line"  news.google.com Alton Telegraph "We went through the entire budget line by line, piece by piece," she said, starting in November and working with all department heads. ... news.google.com Suburban News Per state requirements, the council outlined specific budget line items for the cuts, suggesting that the majority of the cuts be made through a freeze in ... news.google.com Port Washington News It's been done through a groundbreaking teachers' contract, with a zero percent increase in the first year, and by taking a hard look at the budget , line ... and more » From Google News Search: "budget line"  robinsontextiles.com 325px x 325px | 23.30kB [source page] Budget Line V Neck Inmate Shirt  static.wehkamp.nl 125px x 638px | 29.70kB [source page] CSI budget line 18 artikelen Pagina 1 van 2 Volgende From Yahoo Image Search: "budget line"  swamppolitics.com unknown Sat, 13 Feb 2010 13:45:00 GM growth tomorrow - by cutting taxes for small businesses, investing in education, promoting clean energy, and modernizing our roads and railways - we have to continue to go through the . budget line. by line, looking for ways to save. ...  spokesman.com unknown Sun, 31 Jan 2010 08:00:00 GM There is a popular story about two campers discussing the possibility of running into a bear. One says to the other, Well, I'll just drop my backpack and run for the hills. I don't think you can outrun a bear, the other camper says.  fromrags2riches.net Rags Mon, 25 Jan 2010 22:45:00 GM In our world, we trade our hard earned money for resources, so an individual's limiting factor is his or her income. We can better understand the economizing problem that people face by visualizing a . budget line. (also known as a budget ... From Google Blog Search: "budget line" |
