202 Budget Constraint Explained
Taking off from the basics of consumer theory, we now discuss the dynamics of the budget constraint and what could cause a change in the graph.
A few questions which we can ask ourselves include:
- What happens when prices of goods change?
- What happens when we experience an increase/decrease in monetary income?
- How is my real income affected?
- What about receiving subsidies in kind and having to pay taxes?
- How should I apply my indifference curve?
By the end of this video, you should be able to answer the questions above.