Question

A consumer wants to consumes two goods the price of banana is Rs 5 and the price of mango is Rs 10 .The consumer income is Rs 40

a)how many bananas can she consumes if she spend her entire income on that goods?

b)how much mangoes can she conSume if she spend her entire income on that good?

c) is the slope of budget line downward or up word ?

d) Are the bundles on the budget line equal to the consumer income or not?

e) if you want to have more of bananas you have to give up mangoes .is it true.​

Answer 1

Answer:

a) 8

b) 4

c) downward

d) no

e) yes

Answer 2

(a) A consumer can consume 8 bananas.

The reason is that the cost of 1 banana is 5 and the income of the consumer is 40. If he spends the whole amount consuming bananas then we need to divide the total income with the price of 1 banana which is 5 divided by 40 which is 8.

(b) A consumer can consume 4 mangoes

The reason is that the cost of 1 mango is 10 and the income of the consumer is 40. If he spends the whole amount in consuming mango then we need to divide the total income with the price of 1 mango which is 10 divided by 40 which is 4

(c) The slope of the budget line is always downwards.

(d) yes, the bundles of the budget line are equal to the consumer’s income. this is because a consumer consumes according to his budget.

(e) No. A consumer does not necessarily give up on mangoes if he wants to have more bananas. He can choose to have 6 bananas and 1 mango with 40