Chapter 21 Questions for Review

Chapter 21 Questions for Review -...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 21 Questions for Review 1. Figure 4 shows the consumer's budget constraint. The intercept on the horizontal  axis shows how much cheese the consumer could buy if she bought only cheese;  with income of $3,000 and the price of cheese $6 a pound, she could buy 500  pounds of cheese. The intercept on the vertical axis shows how much wine the  consumer could buy if she bought only wine; with income of $3,000 and the price of  wine $3 a glass, she could buy 1,000 glasses of wine. With cheese on the horizontal  axis and wine on the vertical axis, the budget constraint has a slope of -1,000/500 =  -2. Note that if you had put wine on the horizontal axis and cheese on the vertical  axis, the budget constraint would have a slope of -500/1,000 = -1/2. Figure 4
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2. Figure 5 shows a consumer's indifference curves for wine and cheese. Four  properties of these indifference curves are: (1) higher indifference curves are 
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

Chapter 21 Questions for Review -...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online