Business, 26.03.2021 05:50, Jasten

3. A consumer’s consumption bundle consists of 2 goods; R and S, with prices PR and PS The consumer’s income is M. Assume that S is graphed on the vertical axis and R is graphed on the horizontal axis. a. Write down the equation of the budget line in explicit form with S as the dependent variable. b. In terms of prices, write down the absolute value of the slope of the budget line? c. What happens to the budget line if the price of R increases, but the price of S remains constant? d. In terms of prices, write down the absolute value of the slope of the budget line if the price of R doubles and the price of S triples. e. In part d, does the budget line become flatter or steeper? Explain.

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3. A consumer’s consumption bundle consists of 2 goods; R and S, with prices PR and PS The consumer’...