Answer to Question #166348 in Microeconomics for Niharika

Question

2.5 Teresa spends her entire budget and consumes 6 units of z and 20 units of y. The price ofr is twice the price of y. Her income doubles and the price of y doubles, but the price of z stays the same. If she continues to buy 20 units of y, what is the largest number of unts of that she can afford?

Answer 1

$$6z+20y=I$$

$$z=2y$$

$$y=\frac {I}{32}$$

If z=y

$$az+20y=2I$$

$$ay=\frac {44}{32}I$$

$$a\frac {I}{32}=\frac{44}{32}I$$

$$a=44$$