« previous next »

Author Question: How does a decrease in the price of one good affect a consumer's budget constraint? How is the ... (Read 25 times)

K@

  • Hero Member
  • *****
  • Posts: 608
on: Jun 29, 2018
How does a decrease in the price of one good affect a consumer's budget constraint? How is the effect different from a decrease in the consumer's income?
 
  What will be an ideal response?

Question 2

Are some monopolies created by government legislation that gives a firm the unique right to produce a good or service?
 
  What will be an ideal response?


Jordin Calloway

  • Sr. Member
  • ****
  • Posts: 334
Reply #1 on: Jun 29, 2018
Answer to Question 1

A decrease in the price of one good causes the budget constraint to pivot rightward along the axis that measures the quantity of the good in question. This is because the consumer's endowment can buy more units of a good when the price falls. The slope of the budget constraint also changes because the opportunity cost changes when the price of a good falls.
In case of a decrease in the consumer's income, the budget constraint shifts to the left. The slope will not change as the opportunity cost does not change with a change in income.

Answer to Question 2

Yes, some monopolies are created by government legislation, such as patent or copyright laws and the granting of public franchises. Monopolies that are created because of legal barriers to entry are called legal monopolies.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

K@

  • Hero Member
  • *****
  • Posts: 608
Reply #2 on: Jun 29, 2018
Thank you :)


Jordin Calloway

  • Sr. Member
  • ****
  • Posts: 334
Reply #3 on: Jun 29, 2018
Happy to help you


« previous next »
 

Did you know?

Cutaneous mucormycosis is a rare fungal infection that has been fatal in at least 29% of cases, and in as many as 83% of cases, depending on the patient's health prior to infection. It has occurred often after natural disasters such as tornados, and early treatment is essential.

Did you know?

When blood is deoxygenated and flowing back to the heart through the veins, it is dark reddish-blue in color. Blood in the arteries that is oxygenated and flowing out to the body is bright red. Whereas arterial blood comes out in spurts, venous blood flows.

Did you know?

A cataract is a clouding of the eyes' natural lens. As we age, some clouding of the lens may occur. The first sign of a cataract is usually blurry vision. Although glasses and other visual aids may at first help a person with cataracts, surgery may become inevitable. Cataract surgery is very successful in restoring vision, and it is the most frequently performed surgery in the United States.

Did you know?

People often find it difficult to accept the idea that bacteria can be beneficial and improve health. Lactic acid bacteria are good, and when eaten, these bacteria improve health and increase longevity. These bacteria included in foods such as yogurt.

Did you know?

In 1885, the Lloyd Manufacturing Company of Albany, New York, promoted and sold "Cocaine Toothache Drops" at 15 cents per bottle! In 1914, the Harrison Narcotic Act brought the sale and distribution of this drug under federal control.

Rhytidoplasty. This is a common form of plastic surgery in which the skin is pulled and sutured to d Rhytidoplasty. This is a common form of plastic surgery in which the skin is pulled and sutured to d
onions taste good onions taste good
“Bad,” “neutral,” and “good” mutations. “Bad,” “neutral,” and “good” mutations.
A good Mnemonic to know Mg K Ca Na A good Mnemonic to know Mg K Ca Na
Gestalt Law of Good Continuation Gestalt Law of Good Continuation
Cost = $99.49; Rate of markup based on cost = 32%. Find the markup and selling price. Cost = $99.49; Rate of markup based on cost = 32%. Find the markup and selling price.
Video: Heart sounds

For a complete list of videos, visit our video library