Cruise Budget Constraint 6 5 0,5 2,4 4, 3 6, 2 2 8,1 1 10,0 10 12 8 4 6 #pairs of shoes # dresses Based on the graph of Maren’s budget constraint for dresses and shoes, what accurately describes the slope of her budget constraint? It is negative because dresses are more expensive than shoes It is positive because Maren still has plenty of money and is able to afford both dresses and shoes. If the government set a price ceiling of $40, there would be:

It is negative because dresses are more expensive than shoes.

If government set a price ceiling of $40, there would be:

There is a surplus (or excess demand) of about 8 units.

Explanation:

The Cruise Budget Constraints are for shoes and dresses. The budget constraint is quantity of goods that a consumer can purchase at a given price. Maren's graph elaborates budget constraints for shoes and dresses. The budget constraint for Maren is negative because dresses are more expensive than shoes. Maren can buy more shoes and lesser dresses keeping in mind his budget constraints.

If the government sets a price ceiling of $40 then there will a surplus of demand of about 8 units. The graph shows that at the price of $40 the supply will be 16 units and demand will be 24 units. There will be shortage of supply or excess of demand of about 8 units.

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