Question

Budget constraint long question

Answer 1

Explanation:

In economics, a budget constraint represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income. Consumer theory uses the concepts of a budget constraint and a preference map to analyze consumer choices. Both concepts have a ready graphical representation in the two-good case.

Answer 2

HEY MATE HERE IS YOUR ANSWER

Budget constraints

Budget constraintsDefinition of Budget constraints

Budget constraintsDefinition of Budget constraintsA budget constraint occurs when a consumer is limited in consumption patterns by a certain income.

Budget constraintsDefinition of Budget constraintsA budget constraint occurs when a consumer is limited in consumption patterns by a certain income.When looking at the demand schedule we often consider effective demand. Effective demand is what people are actually able to spend given their limitations of income.

Budget constraintsDefinition of Budget constraintsA budget constraint occurs when a consumer is limited in consumption patterns by a certain income.When looking at the demand schedule we often consider effective demand. Effective demand is what people are actually able to spend given their limitations of income.Temporary budget constraints can be overcome by borrowing, but in the long term budget constraints are determined by income such as rent and wages.

Budget constraintsDefinition of Budget constraintsA budget constraint occurs when a consumer is limited in consumption patterns by a certain income.When looking at the demand schedule we often consider effective demand. Effective demand is what people are actually able to spend given their limitations of income.Temporary budget constraints can be overcome by borrowing, but in the long term budget constraints are determined by income such as rent and wages.Diagram showing a budget constraint and indifference curves

Budget constraintsDefinition of Budget constraintsA budget constraint occurs when a consumer is limited in consumption patterns by a certain income.When looking at the demand schedule we often consider effective demand. Effective demand is what people are actually able to spend given their limitations of income.Temporary budget constraints can be overcome by borrowing, but in the long term budget constraints are determined by income such as rent and wages.Diagram showing a budget constraint and indifference curvesIncome = £40

Budget constraintsDefinition of Budget constraintsA budget constraint occurs when a consumer is limited in consumption patterns by a certain income.When looking at the demand schedule we often consider effective demand. Effective demand is what people are actually able to spend given their limitations of income.Temporary budget constraints can be overcome by borrowing, but in the long term budget constraints are determined by income such as rent and wages.Diagram showing a budget constraint and indifference curvesIncome = £40Price of apples = £1

Budget constraintsDefinition of Budget constraintsA budget constraint occurs when a consumer is limited in consumption patterns by a certain income.When looking at the demand schedule we often consider effective demand. Effective demand is what people are actually able to spend given their limitations of income.Temporary budget constraints can be overcome by borrowing, but in the long term budget constraints are determined by income such as rent and wages.Diagram showing a budget constraint and indifference curvesIncome = £40Price of apples = £1Price of bananas = £2

Budget constraintsDefinition of Budget constraintsA budget constraint occurs when a consumer is limited in consumption patterns by a certain income.When looking at the demand schedule we often consider effective demand. Effective demand is what people are actually able to spend given their limitations of income.Temporary budget constraints can be overcome by borrowing, but in the long term budget constraints are determined by income such as rent and wages.Diagram showing a budget constraint and indifference curvesIncome = £40Price of apples = £1Price of bananas = £2The budget line is B1 – this shows maximum consumption with current income.

– this shows maximum consumption with current income.To maximise utility, the consumer can choose on IC1, 20 apples, 10 bananas.

– this shows maximum consumption with current income.To maximise utility, the consumer can choose on IC1, 20 apples, 10 bananas.An increase in income would shift the budget line to the right.