1)The pric of coffeeis always equal to one-half the price of tea. When we plot t

Question

1)The pric of coffeeis always equal to one-half the price of tea. When we plot the budget lie for coffee and ea, coffee is plotted on the horizontal axis. WHat is the slope of this budget line?

a)-2    b)-1/2   c)2   d)1/2

2)Suppose you only consume goodand clothing, and cothing is plotted on the vertical axis. Also, you purchase fod at a fixed price (Pf), but the price of clothing declines as you buy in largr quantities. Whatdoes the budget loine look like in this case?

a)The Budget line will not be a straight line, but it may e concave or convex

b)The budget line is now concave to the origin (bows out from)

c)Thebudget line is a straight line

d) The budget line is now convex to the origin (bows in toward

Explanation / Answer

A) The Budget line will not be a staright line but it may e concave or convex

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