If Amy’s income increases to $24 a week and the prices of coffee and cake remain unchanged, describe the change in her budget line.

Draw a graph of Marc’s budget line with the quantity of DVDs on the x-axis. What is the slope of Marc’s budget line? What determines its value?
The budget line is illustrated in Figure 9.4. The slope of the budget line, when DVDs are plotted on the x-axis is -2. The magnitude of the slope is equal to the relative price of a DVD. The slope of the budget line is “rise over run.” If the quantity of DVDs decreases from 2 to 0, the quantity of root beer increases from 0 to 4 bottles. The rise is 4 and the run is  - 2. So the slope equals 4/ - 2, which is  - 2.

Transcribed Image Text:

FIGURE 9.4 Problem 15 BL 2 3 DVDS (number per month Root beer (bottles per month)