Question

A consumer’s budget set for two goods (X and Y) is 400 ≥ 4X + 5Y.The budget set is illustrated below. What are the values of A and B?

Answer 1

The values of A and B in the consumer's budget set equation 400 ≥ 4X + 5Y can be found by solving the equation for X and Y and finding the intercepts with the axes.

Step-by-step explanation:

The consumer's budget set equation can be written as:

400 ≥ 4X + 5Y

To find the values of A and B, we need to solve the equation for X and Y.

Let's rearrange the equation:

4X + 5Y ≤ 400

Now we can plot this equation on a graph, where X represents the quantity of one good and Y represents the quantity of the other good. We will have a line with a slope of -4/5 passing through the point (0,80).

The values of A and B are determined by the intercepts of this line with the axes. The intercept on the X-axis is A, and the intercept on the Y-axis is B. We can find these intercepts by setting X or Y equal to zero and solving for the other variable.

Therefore, the values of A and B are:

A = 100

B = 80