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Unformatted text preview: outside of the budget set and budget line, and cannot be afforded. To find the slope of the budget line, remember that ∆ C / ∆ P = -P P /P C Slope of the budget line in this example = - ($1.50) / ($1.00) = - 1.5. If the market price for potato chips changed from $1.50 to $1.00, the consumer’s budget line would remain fixed on the y-axis and would shift out along the x-axis to the point where the number of chips bought would exhaust the $5.00 income. If the consumer had a change in his income from $5.00 to $6.00, then he could afford to purchase more goods and his budget line would shift outward (figure 6.a.3). However, if he experienced a decrease in income his budget line would shift inward....
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This note was uploaded on 05/05/2010 for the course ECON 303 taught by Professor Cheng during the Spring '07 term at USC.
- Spring '07