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Students Are Requested To The Notes Below, Leaving Space Where Required For Diagram Which Will Be Done in Online Classes

This document provides an overview of Lesson 2 on the budget line for a grade 12 economics class. [1] It discusses how the budget line shifts depending on changes in money income or changes in the price of goods, affecting real income. [2] Specifically, it outlines how the budget line is affected when the price of one or more goods changes, keeping income constant. [3] Examples are given for when the price of good x falls or rises, the price of good y changes, or when the prices of both goods fall or change by the same percentage.

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Wassila Elaheebux
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31 views

Students Are Requested To The Notes Below, Leaving Space Where Required For Diagram Which Will Be Done in Online Classes

This document provides an overview of Lesson 2 on the budget line for a grade 12 economics class. [1] It discusses how the budget line shifts depending on changes in money income or changes in the price of goods, affecting real income. [2] Specifically, it outlines how the budget line is affected when the price of one or more goods changes, keeping income constant. [3] Examples are given for when the price of good x falls or rises, the price of good y changes, or when the prices of both goods fall or change by the same percentage.

Uploaded by

Wassila Elaheebux
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Lesson 2: Budget line (Part 1) Grade 12- Ms Wassila EL

Lesson 2: Budget line Part 1 [This lesson starts from where we has stopped in class]

Students are requested to the notes below, leaving space where required for diagram which will be
done in online classes.

Changes in the budget line

The budget line will shift depending on:

(a) Changes in money income (Py and Px are constant- purchasing power)
(b) Changes in the price of the good- Real income changes (Money income constant)

1. Changes in the price of the good

When there are changes in the price of the good, the budget line is said to shift to rotate. This implies that
the price ration of change in Y / changes in X will change

(i) Assuming income constant, Price of Good x falls and Price of Good y constant. Show the
effect on the budget line.

(ii) Assuming income constant, Price of Good x constant, Price of Good y rises. Show the effect
on the budget line.

1
Lesson 2: Budget line (Part 1) Grade 12- Ms Wassila EL

(iii) Income constant, Price of Good x rises and price of Good y falls. Show the effect on the
budget line

(iv) Income constant, Price of Good x and Good y falls. Show the effect on the budget line

(v) Income constant, Price of Good x and Good y falls by the same percentage

Lesson 2 ends here, lesson 3 will be on budget line part 2: Changes in income

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