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Change in prices of goods in same proportion will shift the budget line parallel or not ?
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Most Upvoted Answer
Change in prices of goods in same proportion will shift the budget lin...
Haa i think increase or decrease in price of both goods in same proportion will also shift budget line parallel, but am not sure isliye mene waha nhi likha tha....
Community Answer
Change in prices of goods in same proportion will shift the budget lin...
Thanks brother for your answer . According to me if prices of both goods are changed in a same proportion then it will shift parallel also as slope is still same i.e Px/Py . Getting
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Read the following passage and answer the questions that follows:In economics, rationing is an artificial restriction of demand and is done to keep price below the equilibrium (market-clearing) price determined by the process of supply and demand in an unfettered market. Thus, rationing can be complementary to price controls which can be explained through indifference curve approach.There are two kinds of rationing done by the government to reduce consumption—price rationing and non-price rationing. By rationing, we mean exercise tax and by non-price rationing, we mean all types of control on the quantity consumed. Non-price rationing could be done by giving away coupons that would enable low income families to obtain some goods at affordable prices, which could not be possible if the prices were to increase alone. With coupon schemes, it would develop a black market for coupons, which would paradoxically increase the utility for those who are in need of that commodity by collection of more of these coupons from those who are not in need. This ensures greater marginal utility for those people who are in need of the commodity and will provide exchange of money to those who sell these coupons. For this, it is necessary for the government to encourage trading of the coupons.The major importance of introducing rationing is to keep the price of important commodities under control, as for a necessary commodity, there will be an excessive demand in the market which will drive their price up in the market and high prices leads to reduction of consumption and utility for those who could not afford it. This ensures that the resources are planned in favour of the poor people of the country and restricts the rich people to ensure excessive purchase of limited resources of the country. This ensures development and equality of welfare and utilitybetween the rich and the poor people. Rationing of the good is done by the government and not the private sector. There is the same limit put on every person on the budget spending to which people could buy the commodities and within the limit, one could buy any amount of the commodity.Q. Rationing of goods by the government ......................

Direction: Read the following passage and answer the questions that follows:More specifically, a price ceiling (in other words, a maximum pric e) is put into effect when the government believes the price is too high and sets a maximum price that producers can charge; this price must lie below the equilibrium price in order for the price ceiling to have an effect.The price ceiling is usually instituted via law and is typically applied to necessary goods like food, rent, and energy sources in order to ensure that everyone has access to them.Benefits and Downsides:Price ceilings are beneficial to society, and are often necessary, in that they make sure that essential goods are financially accessible to the average person, at least in the short run. By lowering costs, price ceilings also have the beneficial effect of helping to stimulate demand, which can contribute to the health of an economy.However, there can also be downsides to price ceilings. While they stimulate demand, price ceilings can also cause shortages. Where the ceiling is set, there is more demand than at the equilibrium price. This means that the amount of the good or service supplied is less than the quantity demanded.For example, in agriculture, medicine, and education, many governments set maximum prices to make the needed goods or services more affordable. Producers may respond to such an economic situation by rationing supplies, decreasing production levels or lowering the quality of production, making the consumer pay extra for otherwise free elements of the good (features, options, etc.), and more.Q. When does the government put price ceiling?

Direction: Read the following passage and answer the questions that follows:More specifically, a price ceiling (in other words, a maximum pric e) is put into effect when the government believes the price is too high and sets a maximum price that producers can charge; this price must lie below the equilibrium price in order for the price ceiling to have an effect.The price ceiling is usually instituted via law and is typically applied to necessary goods like food, rent, and energy sources in order to ensure that everyone has access to them.Benefits and Downsides:Price ceilings are beneficial to society, and are often necessary, in that they make sure that essential goods are financially accessible to the average person, at least in the short run. By lowering costs, price ceilings also have the beneficial effect of helping to stimulate demand, which can contribute to the health of an economy.However, there can also be downsides to price ceilings. While they stimulate demand, price ceilings can also cause shortages. Where the ceiling is set, there is more demand than at the equilibrium price. This means that the amount of the good or service supplied is less than the quantity demanded.For example, in agriculture, medicine, and education, many governments set maximum prices to make the needed goods or services more affordable. Producers may respond to such an economic situation by rationing supplies, decreasing production levels or lowering the quality of production, making the consumer pay extra for otherwise free elements of the good (features, options, etc.), and more.Q. How do the producers respond to the situation of price ceiling?

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Change in prices of goods in same proportion will shift the budget line parallel or not ?
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Change in prices of goods in same proportion will shift the budget line parallel or not ? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Change in prices of goods in same proportion will shift the budget line parallel or not ? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Change in prices of goods in same proportion will shift the budget line parallel or not ?.
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