« previous next »

Author Question: How does a decrease in the price of one good affect a consumer's budget constraint? How is the ... (Read 71 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?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

The top five reasons that children stay home from school are as follows: colds, stomach flu (gastroenteritis), ear infection (otitis media), pink eye (conjunctivitis), and sore throat.

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Did you know?

Bacteria have flourished on the earth for over three billion years. They were the first life forms on the planet.

Did you know?

Common abbreviations that cause medication errors include U (unit), mg (milligram), QD (every day), SC (subcutaneous), TIW (three times per week), D/C (discharge or discontinue), HS (at bedtime or "hours of sleep"), cc (cubic centimeters), and AU (each ear).

Schemas Affect How We Encode and Remember Schemas Affect How We Encode and Remember
The paper test involves holding a piece of paper near the tailpipe of an idling engine. A good ... The paper test involves holding a piece of paper near the tailpipe of an idling engine. A good ...
Good Old War - Part Of Me [Audio] Good Old War - Part Of Me [Audio]
How much the temperature will rise depends on many factors that affect the level of GHG emission How much the temperature will rise depends on many factors that affect the level of GHG emission
Economic recession in 2008 saw a small decrease in demand Economic recession in 2008 saw a small decrease in demand
Oatmeal and other whole grain cereals are good sources of carbohydrates to start your morning off Oatmeal and other whole grain cereals are good sources of carbohydrates to start your morning off
Video: Endocytosis -Types and Phagocytosis

For a complete list of videos, visit our video library