Agricultural Economics 3rd Edition by Evan Drummond, John Goodwin

Exercise 1

Draw a set of axes with the quantities of two goods, A and B, measured on the axes. Draw a typical budget line. Now show how this budget line would change for each of the following changes in the ceteris paribus conditions:
• An increase in the price of A, cetera paribus
• A decrease in the price of A, ceteris paribus
• An increase in the price of B, ceteris paribus
• A decrease in the price of B, ceteris paribus
• An increase in income, ceteris paribus
• A decrease in income, ceteris paribus
• A 10 percent decrease in the price of both A and B, ceteris paribus.