Explain why the budget line is downward sloping.

1.	Explain why the budget line is downward sloping.
Answer» The budget line is downward sloping because a consumer can increase the consumption of good 1 only by decreasing the consumption of good 2. The consumer have limited income which is can spend to those goods between good 1 and good 2. The slope of the budget line is - P1/P2 = Δx₂/Δx₁, which implies the rate of exchange or the rate at which good 2 can be substituted for good 1.

Answer»

The budget line is downward sloping because a consumer can increase the consumption of good 1 only by decreasing the consumption of good 2. The consumer have limited income which is can spend to those goods between good 1 and good 2.

The slope of the budget line is - P1/P2 = Δx₂/Δx₁, which implies the rate of exchange or the rate at which good 2 can be substituted for good 1.

Discussion

No Comment Found

Related InterviewSolutions

What is meant by coagulation of a colloidal solution? Describe briefly any three methods by which coagulation of lyophobic sols can be carried out.
What is meant by coagulation of a colloidal solution? Name any method by which coagulation of lyophobic sols can be carried out.
Classify the following contraceptives measures into different methods of birth control.(1) Vasectomy(2) tubectomy(3) Saheli(4) Diaphragms(5) Cervical caps(6) Condoms
An object is placed at a distance of 30 cm from a concave lens of focal length 15 cm. List four characteristics (nature, position etc) of the image formed by the lens.
Explain the following: (i) CH3COOH is a weak acid. (ii) Propene undergoes addition reaction. (iii) The gas stoves have inlets for air.
Accumulation of harmful chemicals in our body can be avoided. Explain how this can be achieved ?
State the changes that take place in the uterus when: (i) Implantation of embryo has occurred (ii) Female gamete/egg is not fertilised
A hollow metal sphere of radius 5cm is charged such that the potential on its surface is 10V. What is the potential at the centre of the sphere?
Ms. Raveena Sen is an IT expert and a freelancer. She recently used her skills to access the Admin password for the network server of Super Dooper Technology Ltd. and provided confidential data of the organization to its CEO, informing him about the vulnerability of their network security. Out of the following options (i) to (iv), which one most appropriately defines Ms. Sen? Justify the reason for your chosen option: (i) Hacker (ii) Cracker (iii) Operator (iv) Network Admin
An elevator descends into a mine shaft at the rate of 6 m/min. If the descent starts from 10 above the ground level, how long will it take to reach -350 m?

Explain why the budget line is downward sloping.

Discussion

No Comment Found

Related InterviewSolutions

Reply to Comment