Quizz 1

Assume income =20. There are 2 goods with prices=2, the budget line is:

• 10 = c1 + c2

• 20 ≥ c1 + c2

• 20 = c1 + c2

• 10 ≥ c1 + c2

The budget constraint is defined by:

• R = p1c1 + p2c2

• R ≥ p1c1 + p2c2

• R = p1c1 - p2c2

• R = - p1c1 + p2c2

If the price of a good increases, when other variables remain constant, the budget line:

• It shifts in a parallel way

• It does not change

• It shifts, but not in a parallel way

• It increases

An increase in revenue, keeping prices constant:

• Leaves your purchasing power unchanged

• Increases your purchasing power

• Does not explain the purchasing power

• Reduces the purchasing powe

If the budget line is 100=10 c1 + 20 c2. The slope of the line is:

• 0.5

• 1

• 2

• 10