Question

Suppose a consumer has income of dollars 20 which to be spent on good B and A. Good B cost dollar 4 and good A cost dollar 2 ,then

A. Determine budget equation?
B.draw budget line?

Answer 1

A. Budget equation

The budget line shows the various combination of two goods that can be purchased with the given money income. It can be represented by:-

$MY=P_A×A+P_B×B\\20=2A+4B$

B. Budget line