For m > p2, the demand functions for goods 1 and 2 are given by the equations, x1 =m/p2 - 1 and x2 = p1/p2, where m is income and p1 and p2 are prices. Let the horizontal axis represent the quantity of good 1. Let p1 = 1 and p2 = 2. Then for m > 2, the income offer curve is:a. a vertical line.b. a horizontal line.c. a straight line with slope 2.d. a straight line with a slope of 1/2.e. None of the above.

Income offer curve define as the curve which depicts the optimal choice of two goods at different levels of income at constant price. It is otherwise known as "Income Expansion Path"

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andromache andromache · Answer 2 · 2021-11-19T12:41:54+01:00

The income offer curve be the horizontal line.

Given that,

For m > p2, the demand functions for goods 1 and 2 are given by the equations, x1 =m ÷ p2 - 1 and x2 = p1 ÷ p2.
Here m is income and p1 and p2 are prices.
Let the horizontal axis represent the quantity of good 1. Let p1 = 1 and p2 = 2. Then for m > 2.

Based on the above information, the information is as follows:

The Income offer curve means the curve that represents the choice of two goods at various income level but the price should be the same.
So based on the given situation, it should be in the horizontal line.

Therefore we can conclude that option B is correct.

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