Macro Economics x o Chapter 5 (MC) fia vocs.edu/webapps/assessment/take/launch.j

Question

Macro Economics x o Chapter 5 (MC) fia vocs.edu/webapps/assessment/take/launch.jsp?course assessment id .2546490 1&course; id 856195 1&content; id .76 QUESTION 1 Good 1 eier the above oudgel from AB CO is consistent with a decrease in money income an increase in money income o an increase in the price of Good 1 and no change in the price of Good 2 a decrease in the price of Good 2 and no change in the price of Good 1 Refer table demand is represented by columns (3) and t) and supply is represented by columns 3) and (4x equilibrium price and qu S10 and 60 units $9 and 60 units S8 and 80 units 57 and 30 units

Explanation / Answer

Q1. Shifts in budget is due to various reasons and one of them is income. Increase in income increases the capacity to the person to buy more goods at the given price, vice-versa. Budget line pivots in/out due to change in price of 1 good and other being constant. If, say, price of good 1 increases and that of good 2 remains constant, budget line pivots in without changing the y-intercept. So it will start from A and pivots in at x-axis.

As this budget line has shifted out parallely, the budget set of consumer is now bigger than earlier.Hence is due to increase in income.

Q2. Equilibrium occurs when demand equals supply. At Q=60 units, demand=supply, hence it is the equilibrium and corresponding price is $9.

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.