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Chapter 8.docx

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Department
Economics
Course
Economics 1021A/B
Professor
Brendan Murphy
Semester
Fall

Description
Chapter 8: Utility and Demand Your consumption choices are categorized under two broad headings: Consumption Possibilities All the things you can afford to buy (which are different combinations of goods and services that are limited by your income and the prices that you must pay) A Consumer’s Budget Line Marks the boundary between those combinations of goods and services that a household can afford to buy and those that it cannot afford. As you move along the BL, the number of goods and services change in correlation to each other (giving up one for the other) It marks the boundary between what is affordable and unaffordable for someone. All the points on and under it are affordable whereas the points above it are unaffordable. Changes in Consumption Possibilities Consumption possibilities change when income or price changes. A rise in income shifts the budget line left but leaves the slope unchanged. A change in price changes the slope of the line. The bu
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