Budget line examples: Use the diagrams below to show how each event would alter the diagram's initial budget line. |
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| 1a. Your income doubles. | 1b. The price of Y doubles. | 1c. With volume discounts, once you purchase 30 units of X at the regular price, you can purchase extra units for 1/2 price. |
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| 2a. The government imposes a 33 percent income tax. | 2b. The price of X falls by 50 percent. | 2c. With "lifeline rates," you can buy the first 60 units of X at 1/2 price; extra units sell for the regular price. |
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| 3a. Inflation doubles the price of X and the price of Y. | 3b. The price of X falls by 50%, and the price of Y rises by 50%. | 3c. The government offers vouchers for you to acquire the first 40 units of X for free; extra units sell for the regular price. |
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