Question

Ramu has an income of Rs 20 and suppose he wants to consume two commodities X and Y, both the goods are priced at Rs 4 per unit.
(a) Find out all the budget sets available to Ramu.
(b) Draw the budget line.
(c) What factors can change the budget set of Ramu.

Answer 1

Answer:

(a) all the budget sets are:

(3,2), (2,3), (4,1), (1,4)

(b) budget line will be straight.

(c) some factors are:

• price of both commodity.
• income of ramu