Consider a person who is endowed with 10 units of P and 10 units of G. If you observe the person not buying or selling Good Pand G, the person's BL is the ( Select ) If you observe the person selling G and using the proceeds to buy P the person's BL is ( Select ) If you observe the person selling P and using the proceeds to buy G the person's BL is ( Select )
Consider a person who is endowed with 10 units of P and 10 units of G. If you observe the person not buying or selling Good Pand G, the person's BL is the ( Select ) If you observe the person selling G and using the proceeds to buy P the person's BL is ( Select ) If you observe the person selling P and using the proceeds to buy G the person's BL is ( Select )
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Options for all of them: blue one, red one, neither blue or red
4th option: homthetic preference, quasilinear preference, revealed preference
![**Text Description:**
Consider a person who is endowed with 10 units of P and 10 units of G.
- If you observe the person not buying or selling Good P and G, the person’s BL is the [Select].
- If you observe the person selling G and using the proceeds to buy P, the person’s BL is [Select].
- If you observe the person selling P and using the proceeds to buy G, the person’s BL is [Select].
- This is an example of [Select].
**Graph/Diagram Explanation:**
The graph below the text illustrates a budget line (BL) and indifference curves (IC) in a standard microeconomic setting. The axes represent the quantities of two goods: Good P on the vertical axis and Good G on the horizontal axis.
1. **Endowment Point (10, 10):** The initial endowment point is marked at (10, 10), meaning the person starts with 10 units of Good P and 10 units of Good G.
2. **Budget Lines:**
- The initial budget line is shown in blue.
- A red budget line indicates the situation where the person has sold some units of G to buy more units of P.
- A different budget line is likely implied where the person sells units of P to purchase G.
3. **Indifference Curves:**
- IC₁, IC₂, and IC₃ represent different levels of utility.
- Each indifference curve shows combinations of Good P and Good G that provide the same level of satisfaction to the person.
- The higher the indifference curve (further from the origin), the higher the level of utility.
4. **Points on the Graph:**
- Point W denotes an intersection on the blue budget line.
- Point S marks a spot on the x-axis, indicating a certain amount of Good G being consumed.
- Point T is marked on the horizontal axis, indicating the full consumption of Good G under one scenario.
- Point X shows another combination of goods on the red budget line.
This graph and the corresponding choices demonstrate the decision-making process in terms of exchanging or maintaining goods, reflecting concepts such as opportunity cost and preference satisfaction. The example might illustrate a consumer choice theory problem or a budget constraint adjustment scenario.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F56c28172-bd9f-4018-84c3-9f551465e754%2Ff9a01872-28d0-4495-9f50-489e26d484bb%2Fr41its_processed.png&w=3840&q=75)
Transcribed Image Text:**Text Description:**
Consider a person who is endowed with 10 units of P and 10 units of G.
- If you observe the person not buying or selling Good P and G, the person’s BL is the [Select].
- If you observe the person selling G and using the proceeds to buy P, the person’s BL is [Select].
- If you observe the person selling P and using the proceeds to buy G, the person’s BL is [Select].
- This is an example of [Select].
**Graph/Diagram Explanation:**
The graph below the text illustrates a budget line (BL) and indifference curves (IC) in a standard microeconomic setting. The axes represent the quantities of two goods: Good P on the vertical axis and Good G on the horizontal axis.
1. **Endowment Point (10, 10):** The initial endowment point is marked at (10, 10), meaning the person starts with 10 units of Good P and 10 units of Good G.
2. **Budget Lines:**
- The initial budget line is shown in blue.
- A red budget line indicates the situation where the person has sold some units of G to buy more units of P.
- A different budget line is likely implied where the person sells units of P to purchase G.
3. **Indifference Curves:**
- IC₁, IC₂, and IC₃ represent different levels of utility.
- Each indifference curve shows combinations of Good P and Good G that provide the same level of satisfaction to the person.
- The higher the indifference curve (further from the origin), the higher the level of utility.
4. **Points on the Graph:**
- Point W denotes an intersection on the blue budget line.
- Point S marks a spot on the x-axis, indicating a certain amount of Good G being consumed.
- Point T is marked on the horizontal axis, indicating the full consumption of Good G under one scenario.
- Point X shows another combination of goods on the red budget line.
This graph and the corresponding choices demonstrate the decision-making process in terms of exchanging or maintaining goods, reflecting concepts such as opportunity cost and preference satisfaction. The example might illustrate a consumer choice theory problem or a budget constraint adjustment scenario.
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So is this an example of: hometheic preferences, quasilinear preferences, or revealed preferences?
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