00:01
When the income is 300, the price of commodity x is 10, and the price of commodity y is 15.
00:16
Draw the budget line.
00:19
Our income m or it can be i is 300, price of x is 10, and the price of y is 15.
00:46
We can rearrange this into y equals mx plus b format.
00:51
We are going to have good y and good x.
01:47
Graph this like a regular line.
01:51
We will have a point where the intercept is 20 on the y axis.
01:59
The slope is going to be negative 2 over 3.
02:02
Go down 2 over 3, down 2 over 3.
02:44
It is going to cross where x is equal to 30.
03:09
For this we will have to plug in values.
03:25
For this one, if we assume that they are talking about maximum number of x and y based off of the intercepts, then the maximum number for y is going to be 20 and the maximum number for x is 30.
04:07
Then the income increases to 450.
04:13
Both prices increase.
04:15
What happens to the budget line? here, income has increased so the budget line shifts outward, but prices have increased.
04:42
That will cause it to shift inward.
04:45
We are going to rearrange this once again.
05:27
We can see our intercept is still at 20, but then our slope is still negative 15 divided by 22 .5.
06:30
It looks like the budget line ends up looking something like that...