Answer to Question #317044 in Microeconomics for namra

Question

consider a consumer with income rupees hundred there are two commodities 1 and 2 to choose from if the consumer spends all his income on good one he can buy 5 units of it if he spent all his income on good to he can buy 20 units of it is based on the given information attempt the following

Answer 1

Utility Maximizing rule =$\frac{MUx}{MUy}=\frac{Px}{Py}$

The total income= $R100$

Price of good $1(x) = \frac{100}{5}; Px=R20$

Price of good 2$(y)= \frac{100}{20}; Py = R5$

From the above information we can have a budget line.

$100 = 20x+5y$