Lecture 17

Lecture 17 - What is the slope of the budget line? •...

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March 6, 2009 Budget Line – describes the limits to consumption choices and depends on a consumer’s budget and the prices of goods and services When a consumer’s budget increases, consumption possibilities expand (opposite is true as well) How do we change the slope? Change the Price Falling prices allow me to purchase more of that product, ceteris paribus
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Unformatted text preview: What is the slope of the budget line? • Opportunity cost of good on horizontal axis o Ex.) Opportunity cost of a bottle of water is 2 packs of gum • Relative prices o Ex.) Relative price of a bottle of water is 2 packs of gum Utility – the benefit or satisfaction that a person gets from the consumption of a good or service...
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This note was uploaded on 09/29/2009 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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