Purchase Solution

# Indifference Curves and budget lines

Not what you're looking for?

Given the following information, DESCRIBE the budget line for the consumer: Be sure to state what the axes are and provide numbers for the vertical and horizontal intercepts. Also what is the slope of the line? Explain what the budget line represents.

Income =\$1000/ month
Price of 1 pound of steak = \$4.00
Price of 1 pound of potatoes = \$0.50

Now, "overlay" several indifference curves onto the picture. Describe the shape of these curves -- why are they that shape. How can you find the utility-maximization point. Describe why other points on some indifference curves do not represent utility-maximization. NOTE: You are not required to submit graphs as part of any answer. You can explain any relationship that are contained in almost every graph.

##### Solution Summary

The solution answers the question below related to indifference curves and budget line. The question is specfic and the answer provided is also specific to the question.

##### Solution Preview

Total Income = 1000
Steak = \$4
Potato=\$0.50

Budget Line:
1000 = 4Steak + 0.5Potatoes

X axis will represent the number of pounds of Steak
Y axis will represent the number of pounds of potatoes

So if we assume pounds of steak to be X and pounds of potatoes to be Y, we get
1000 = 4x ...

##### Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

##### Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

##### Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

##### Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

##### Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.