Practice question · Estimate
If income doubles from 100 to 200 while prices stay fixed, the budget line shifts outward. Estimate the new -intercept if .
Estimate on a scale from 10 to 60.
Hints
- The intercept is income divided by that good's price.
- Doubling income doubles the intercept.
Show the answer
40 (answers within ±3 count)
Why
New -intercept . The old intercept was 20, it doubles, just like income.
Practise Utility Maximization
The app has 8 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on Utility Maximization
- At the optimum the indifference curve is tangent to the budget line. What does tangency mean in words a…
- Which are true at the optimal consumption bundle?
- Order the steps of utility maximisation.
- At the optimum, MUx/px = MUy/py. Why must the ratios be equal rather than the marginal utilities themselves?