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jayboskeet jayboskeet
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A year ago

The downward-sloping line in the diagram below shows the combinations of healthcare and education expenditures that the government can afford with a given amount of tax revenue.

Short description: A graph plots education against health. Long description: The horizontal axis represents education. The vertical axis represents health. The graph plots four points and a line. Four points A to D, are at the following coordinates: A (less education, better health); B (moderate education, poor health); C (moderate education, better health); D (less education, poor health). The line passes through points, A and B. The line is decreasing and it begins at a point on the vertical axis and ends at a point on the horizontal axis. Point D is below the line and parallel to A. Point C is above the line and parallel to B.

FIGURE 1-6

Refer to Figure 1-6. Suppose the government's current spending is shown by point D. In this case,



▸ the prices of education and healthcare have increased beyond the government's ability to pay.

▸ the government is not spending its total available budget for these two items.

▸ more healthcare expenditures can be achieved only by sacrificing some existing education expenditures.

▸ the government is spending more than its total budget.

▸ more education expenditures can be achieved only by sacrificing some existing healthcare expenditures.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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kniemeier2kniemeier2
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jayboskeet Author
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A year ago
You make an excellent tutor!
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Brilliant ツ
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This site is awesome
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