Answer to Question #264524 in Microeconomics for Jojo

Question

billy madison consumes. 100 units of x and 50 units of y. the price price of x roses from 2 to 3. the price of y remains at 4?

a) how much must billy's income rise so that he can exactly afford 100 units of x and 50 units of y

Answer 1

a)

$income=p_xx+p_yy\\x=100,y=50\\p_x=2,p_y=4\\income=2(100)+4(50)=400$now px rises to 3 , but x=100,y=50

$income=3(100)+4(50)=500\\$

income must rise by $=500-400=100$