1) Maggie buys fish suppers and other goods and services. Given the price changes in the news clip and no change in Maggie’s income, what do we know about Maggie’s budget line if she measures fish suppers on the x-axis?
The price of fish suppers rises so when Maggie buys only fish suppers, she can buy fewer than before the price rise. The price of other goods and services also rises so if Maggie buys only other goods and services, she can buy fewer than before the price rise. How do the intercepts of Maggie’s budget line change? The price of fish suppers rises by more than the price of other goods and services rises, so the relative price of fish suppers increases. What happens to the slope of Maggie’s budget line?
The price of fish suppers rises so when Maggie buys only fish suppers, she can buy fewer than before the price rise. The price of other goods and services also rises so if Maggie buys only other goods and services, she can buy fewer than before the price rise. The x-axis intercept and the y-axis intercept of her budget line decrease. The price of fish suppers rises by more than the price of other goods and services rises, so the relative price of fish suppers increases, and her budget line becomes steeper.
