Question

Give equation of Budget Line.

Solution

The budget line can be expressed as an equation:
M = (PA x QA) + (PB x QB)
Where:
M = Money income;
QA = Quantity of good 1
QB = Quantity of good 2
PA = Price of good 1
PB = Price of good 2

Some More Questions From Theory Of Consumer Behaviour Chapter

What is meant by marginal rate of substitution (MRS)?

Why is MRS always diminishing?

When does a consumer attain equilibrium according to indifference curve approach?

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Theory Of Consumer Behaviour

Give equation of Budget Line.

Some More Questions From Theory Of Consumer Behaviour Chapter

What is meant by marginal rate of substitution (MRS)?

Why is MRS always diminishing?

When does a consumer attain equilibrium according to indifference curve approach?

Give meaning of demand.

Name two determinants of demand.

List the factors that cause changes in demand.

What is law of demand?

What is demand schedule?

Why does demand curve slope downwards?

Differentiate between substitute and complementary goods.

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