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What happens to the budget set if both the prices as well as the income double ? |
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Answer» Solution :There will be no change in the budget set. In the EXAMPLE given in question 4, the budget LINE is represented by the equation: `4 X + 5 y = 20`. If prices as well as the income double, then new budget line will be: `8 x + 10 y = 40` `rArr 2(4x + 5y) = 2 (20)` `rArr 4 x + 5y = 20` Therefore, there will be no change in the budget set and set and the budget line. |
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