If electricity is measured on the horizontal axis,and the price of electricity becomes more expensive beyond 500 kilowatts,we draw:
A) an indifference curve that becomes flatter at 500 kilowatts.
B) a budget constraint that is kinked at 500 kilowatts.
C) a budget constraint that becomes steeper at 500 kilowatts.
D) an Engle curve that becomes negatively-sloped at 500 kilowatts.

Question

Quizplus · Accepted Answer

A kinked budget constraint is a common way to represent a change in the slope of the constraint, such as the increase in electricity prices beyond 500 kilowatts. This means that the consumer faces a different trade-off between electricity and other goods or services above and below this threshold consumption level.

If Electricity Is Measured on the Horizontal Axis,and the Price