Study Guides (248,413)
Canada (121,518)
York University (10,209)
Economics (643)
ECON 1000 (223)
all (27)

econpart4 Notes.docx

5 Pages
116 Views
Unlock Document

Department
Economics
Course
ECON 1000
Professor
All Professors
Semester
Fall

Description
Chapter 9Consumption choices are limited by income and by prices A household has a given amount of income to spend and cannot influence the prices of the goods it buys A households budget line describes the limit to its consumptions choices We describe budget line by using Budget EquationExpenditureIncomeA households real income is its income expressed as a quantity of goods that the household can afford to buy It equals to her income divided by the price of that goodA relative price is the price of one good divided by the price of another good The magnitude of the slope of the budget line equals the relative price of the good measured on the horizontal axis Change in PriceWhen prices change so does budget lineThe higher the price of the good measured on the xaxis other things remaining the same the steeper is the budget line That is an increase in price the budget line rotates inwards and becomes steeperThe lower the price of the good measured on the xaxis other things remaining the same the flatter is the budget line That is a fall in price the budget line rotates outwards and become flatterChange in incomeA change in income changes real income but does not change the relative price The budget line shifts but its slope does not changeAn increase in money income increases real income and shifts the budget line rightwards A decrease in money income decreases real income and shifts the budget line leftwards
More Less

Related notes for ECON 1000

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit