Question

A consumer has Rs 40 and both goods X and Y are priced at Rs 10 and are available in integer units​

Answer 1

Answer:

i) The bundles that are available to the consumer are (0,0) (0,1) (0,2) (0,3) (0,4) (1,0) (1,1) (1,2) (1,3) (2,0) (2,1) (2,2) (3,0) (3,1) (4,0)

ii) (0, 4) (1, 3) (2, 2) (3, 1) and (4, 0) are all bundles that costs the customer exactly Rs.40

Explanation:

Suppose a consumer wants to consume two goods which are available only in integer units. The two goods are equally priced at Rs 10 and the consumer’s income is Rs 40. (i) Write down all the bundles that are available to the consumer. (ii) Among the bundles that are available to the consumer, identify those which cost her exactly Rs 40.

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