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2. Theory of Consumer Behaviour
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Q7 of 26 Page 34

What happens to the budget set if both the prices as well as the income double?

The budget line will be expressed as

8X + 10Y = 40


The new budget line will be same as old one with same slope.


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5

How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged?

6

How does the budget line change if the price of good 2 decreases by a rupee but the price of good 1 and the consumer’s income remain unchanged?

8

Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2 if she spends her entire income. The prices of the two goods are Rs 6 and Rs 8 respectively. How much is the consumer’s income?

9

Suppose a consumer wants to consume two goods which are available only in integer units. The two goods are equally priced at Rs 10 and the consumer’s income is Rs 40.

(i) Write down all the bundles that are available to the consumer.


(ii) Among the bundles that are available to the consumer, identify those which cost her exactly Rs 40.

Questions · 26
2. Theory of Consumer Behaviour
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