Re: ISI

Posted by ritu on Mar 21, 2012; 3:03pm
URL: http://discussion-forum.276.s1.nabble.com/ISI-tp7388712p7392469.html

for fourth question i think it should be part 1....ie....BL shifts out with same intercept on rice axis....my idea was this
your budget line is.....
Pr.R+Pv.V=100Pr
income here is 100 Pr coz he produces rice and then sells it...so revenue  from rice production is his income..
now intercept on vegetable axis,put R=o u get V=100Pr/Pv
intercept on rice axis is ,put V=0,R=100Pr/Pr=100
ur rice intercept is independent of rice or veggie price...so increase in price of rice  doesnt affect BL....but it leads to rise in value of veggie intercept coz its in numerator...so it shifts out with no change in rice intercept.....pls confirm