PYQY = M, where PX = $2, PY = $1 and M = $10 (M is income) a. What is the slope of the budget constraint in QX/QY space (where QX is on the horizontal axis and QY is on the vertical axis)? b. What is the relative price of an additional unit

PYQY = M, where PX = $2, PY = $1 and M = $10 (M is income) a. What is the slope of the budget constraint in QX/QY space (where QX is on the horizontal axis and QY is on the vertical axis)? b. What is the relative price of an additional unit

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section21.1: The Budget Constraint: What The Consumer Can Afford

Problem 1QQ

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Question

Given the following budget constraint:

PXQX + PYQY = M, where PX = $2, PY = $1 and M = $10 (M is income)

a. What is the slope of the budget constraint in QX/QY space (where QX is on the horizontal
axis and QY is on the vertical axis)?
b. What is the relative price of an additional unit of X?
c. What is the relative price of an additional unit of Y

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