Question

What are the assumptions of the budget line? Of the Production Possibilities Model? Highlight the similarities...

What are the assumptions of the budget line? Of the Production Possibilities Model? Highlight the similarities and differences?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Assumptions of budget line:

Income is fixed

Prices of goods are fixed

Complete income is to be spent on the given goods

The chosen combination should lie on the budget line

The assumptions of the production possibilities model are:

1. Resources are used to produce one or both goods

2. Quantity of resources are fixed

3. Technology is fixed

4. Resources are used in technologically efficient model

5. The optimal consumption occurs at the point of tangency of budget line and indifference curve

Similarities:

Only two goods taken into account

Prices are fixed

Optimal point lies on budget line

Difference:

Technology not taken into account in case of budget line

PPF takes into account utility but budget line does not

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain what the differences and similarities between the specific-factor model and Heckseher Ohlin model in terms...
Explain what the differences and similarities between the specific-factor model and Heckseher Ohlin model in terms of trade equilibrium and the relative returns of factors of production are? *Please type the answer, thank you!*
Part 1 Below is a production possibilities table for consumer goods (butter) and capital goods (guns)....
Part 1 Below is a production possibilities table for consumer goods (butter) and capital goods (guns). Production Possibilities Type of Production Production Alternative A Production Alternative B Production Alternative C Production Alternative D Production Alternative E Production Alternative F Production Alternative G Butter 0 1 2 3 4 5 6 Guns 14 13 11 9 7 4 0 Graph the data provided in the table using Excel. (Hints: Type your data into an Excel spreadsheet. With your mouse, highlight the...
Below is a production possibilities table for consumer goods (butter) and capital goods (guns). Production Possibilities...
Below is a production possibilities table for consumer goods (butter) and capital goods (guns). Production Possibilities Type of Production Production Alternative A Production Alternative B Production Alternative C Production Alternative D Production Alternative E Production Alternative F Production Alternative G Butter 0 1 2 3 4 5 6 Guns 14 13 11 9 7 4 0 Graph the data provided in the table using Excel. (Hints: Type your data into an Excel spreadsheet. With your mouse, highlight the data only....
What does a straight-line production possibilities frontier (PPF) represent? What does a bowed-outward PPF represent?
What does a straight-line production possibilities frontier (PPF) represent? What does a bowed-outward PPF represent?
What are the similarities and differences between the Neocolonial dependence model and the dualistic development thesis.
What are the similarities and differences between the Neocolonial dependence model and the dualistic development thesis.
What is the differences between the two-country, two-good model with constant costs of production and the...
What is the differences between the two-country, two-good model with constant costs of production and the model with increasing costs of production. Adequately describe the production possibilities curves for each country in each case. Describe free-trade production and the degree of specialization in each country under both cost situations.
Soal 10 A person's consumption possibilities is defined the budget line because Select one: A. all...
Soal 10 A person's consumption possibilities is defined the budget line because Select one: A. all consumers must consume on their budget line. B. it represents the individual's preference for different combinations of goods. C. it marks the boundary between what is affordable and unaffordable. D. it marks the boundary between what can be produced and what is unattainable given the current state of technology and resources
1One of the similarities between a Line Item Budget and an Appropriations Ordinance is: a. They...
1One of the similarities between a Line Item Budget and an Appropriations Ordinance is: a. They are multi-year documents. b. They are easy to understand. c. They require the establishment of a "Budget Officer". d. They are transparent. 2.Regardless of the budget format utilized, a local government must pass a(n) _______________ in order to legally authorize the expenditure of financial resources. 3. If a municipality adopts a budget ordinance, which of the following positions is required by state statute? a....
In the model of trade based on production possibilities frontiers as presented in the Mankiw text,...
In the model of trade based on production possibilities frontiers as presented in the Mankiw text, the gain from improved technology due to increased trade is not a fundamental source of the benefits to both countries. True False
Discuss FRS for SMEs- Who can use it? Highlight the model(s) and discuss the key differences...
Discuss FRS for SMEs- Who can use it? Highlight the model(s) and discuss the key differences between the Model and GAAP.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT