Question:

Budget line of 'bads'?

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hey guys, just wanna ask how to draw the budget line of a 'bad' good. Since the indifference curves of 'bads' are upward sloping, I'm confused on where to put the Budget Line.

Any economists out there?

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2 ANSWERS


  1. -vely sloped, ask urself why not truncated distinct points(the possible soln..); b'coz analyticlly, u may buy bad and consume bad , this can also be visualised as threshold consumption of bads now each unit of money buys good(or say composite commodity) bundled with bad(or say costs to avoid it) say goin thru eve teasing vs. watching a movie in evening, analytically it's same(b'sides by defn. budget lines or constrains r -vely sloped) analytically both r same but a point ha sinfin slope, but there r advantages of drawing full fledged lnes for analysing bads, which r bundled with goods, else no util. satisfying consumer would(note general axiom of revealed pref. is violated) , so as u rightly had it i.c.'s r +vely sloped. , b.c' s r -vely sloped the max amount of each good money can buy(or force out)


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