Every business firm adopts a widely accepted strategy that is mandatory for its success in the market. The strategy is setting costs to their products in a way as to make them affordable to their customers. Customers buy any product with a particular budget in their mind in which the price of product should fit. Therefore, assigning prices to various products in a smart way is the requisite basic skill for the progress of any business. Students might often feel dazed on how to assign prices in their budget line homework answers.
A basic apprehension of the term ‘budget line’ is important
Budget line in general is a graphical representation of possible combinations of two commodities whose prices sum up to a total of budget or income of the consumer. Budget constraint is another term used for the same representation.
What is basically done to represent a budget line is that income of the consumer is first analyzed and certain combinations of goods produced by the firm, which sum up to give a total equal to income of the consumer, are then made. Alternately, the prices of these combinations may also sum up to a total of money that is less than the income of consumer.
This was a basic idea of your homework topic ‘budget constraint’ which may prove to be helpful for you to write your budget line homework answers. For further information on the same, one can enroll himself in various homework help services trending nowadays on web.
Consumer theory also makes use of the concept
Consumer theory is based largely on analysis of consumer choices. As budget line tells about the income of a consumer which acts as major driving force in their task of purchasing any product, it is a substantial aspect related to the consumer theory.
Consumer budget has to be ascertained via analysis
Any company performs a basic task of analyzing the income of their big and small customers living at various places. A survey of consumer income helps the company in assigning costs to their various products in such a way that their consumers are able to buy them.
Usually, a large number of combination of more than one (two more precisely) goods are made keeping a basic measure in mind that their price total up to be equal to the consumer income. This ensures the facilitation and availability of the goods to the consumer, thereby increasing the sales of the products in turn. Students should also read about consumer budget in order to write their budget line homework answers more aptly.
Budget set to be studied as well
Budget set is yet another related term which comes from the study of budget line. Understanding budget set, however, is quite easy. It’s the set of all possible combinations of any two products of the company which produces the desired result. The desired result referred to here is the sum of money equal to income of the consumer or an amount less than that.
Budget sets are important as they give the administrators of the firm an idea about the combinations in which different products are to be sold. Obviously, because that is the sole purpose for their arrangement. In turn, they help increase the rate of sales of company goods and services. Budget sets often form an important section of your budget line homework answers.
Based on these sets, other terms are also given like consumer’s bundle. Consumer’s bundle is nothing but a combo of two commodities in a quantity which the customer can buy from his income.
Representation of budget line is done on a graph
As we have earlier discussed that budget line is more likely a graphical representation rather than being merely theoretical. The graph is, in general, a straight line which is sloping downwards. You know that a graph has two axes, namely the x-axis and the T-axis. X-Axis shows goods of one type and the y- axis shows those of the other type.
The extremes, on the other hand, show the entire income of the consumer. On moving towards one extreme, it can be deduced that only one type of goods can be bought. Likewise, on moving towards the other side, the opposite is true. One can take help of various homework help services for a better understanding of the concept. Such services can deliver you a more detailed content on the same which will let you understand clearly
Study some important conclusions of the graph
After the graph is represented on a solid paper, it is then studied for evaluation of different conditions related to income and budget and thereby assign costs to certain products. One needs to study these for writing good quality answers.
The basic conclusions drawn out of the graph are:-
- Goods and services are having prices exactly coinciding with the consumer’s income fall on the line.
- Those that cost less than the consumer income fall under the income.
- The products are costing more than the products will fall out of the line.
Shifts in budget line are also studied for these answers
It is known that budget line is a straight line on a graph. However, the position of this line is not fixed and can change according to the changes in certain affecting factors. Often, your budget line homework answers can possess a content of such shifts in budget lines. Therefore, it is necessary to study the topic.
The factors in general, are income of the consumer and price of commodities. If either of them changes, the budget line shifts. The reason is engraved in the fact that if the income of consumer changes (say increases), he’s able to buy more goods with the same income. Thereby, budget line parallel to the previous one is obtained on the same graph.
Why a parallel line? Because, the budget line is a representation of the number of goods of the two type that can be bought with the given income, which therefore will increase if the income does.
Along with the concepts mentioned above, there are many other topics that one needs to know about in order to deal effectively with his budget line homework answers. Seeking help of online homework help services has proved to be of a lot of help to many students in this regard.