Explore BrainMass

The theory of individual behavior

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

A consumer must divide $250 between teh consumption of product X and product Y. The relevant market prices are Px= $5 and Py= $10.

a. Write the equation for the consumers budget line.
b. Illustrate the consumers oppurtuinity set in a carefully labeled diagram.
c. Show how the consumers opportuinity set changes when the price of good X increases to $10. How does this change alter the market rateof subsitution between X and Y?

© BrainMass Inc. brainmass.com October 25, 2018, 1:34 am ad1c9bdddf

Solution Preview

Total income is given to be $250.
There are two goods, X and Y. Price of X is Px = $5, and price of Y is Py = $10.
Let Qx and Qy be quantities of X and Y respectively.

a. The general equation for a budget line is:
Px * Qx + Py * Qy <= Income

Putting in the numbers from above we get

5Qx + 10Qy <= 250

b. To determine the consumer's opportunity set we just need to plot this one a graph with good X on one axis and good Y on the other. In the accompanying graph the blue line is the case when the prices are given to be $5 and $10 for X and Y respectively.

To determine where they intersect the axes we need to solve the budget ...

Solution Summary

The slope of this graph is assessed.

See Also This Related BrainMass Solution

Change Process - Healthcare

1. Discuss the most effective change process you have seen implemented. Why do you believe it was effective? What changes would you have made to make the change process even more effective?

2. Where does change originate? Does the point of origin have an effect on the degree of success of the change? If so, what are the respective effects?

3. How do you motivate employees, contractors, professional staff, and other stakeholders to get involved in the change process? Identify the applicable theory that supports your position.

View Full Posting Details