Question

If a consumer's income is $200, the price of good X is PX = $2, and the price of good Y is PY = $4, then what is the algebraic expression for the consumer's budget constraint?

Answer 1

The algebraic expression for the consumer's budget constraint with an income of $200 and prices of $2 for good X and $4 for good Y is $200 = $2 × QX + $4 × QY.

Step-by-step explanation:

The algebraic expression for a consumer's budget constraint when the consumer's income is $200, the price of good X is $2 (PX = $2), and the price of good Y is $4 (PY = $4), can be written as:

Budget = PX × QX + PY × QY

Replacing the values given for prices of goods X and Y, the budget constraint equation becomes:

$200 = $2 × QX + $4 × QY

This equation shows the different combinations of goods X and Y that the consumer can purchase given their income and the prices of the goods. It represents the trade-off between the quantities of good X and good Y that can be purchased without exceeding the consumer's budget.