Question

Given that Rhumbi's budget line is 25=1/4Qcake +Qtea and the price of tea is R10. What is the equilibrium price and demand?

Answer 1

$$\frac{1}{4}Qc+Q_t=25$$

if Qc=0, then Qt=25

$$I=25\times10=250$$

If Qt=0, Qc=100

$$p_c=\frac{250}{100}=2.5$$