Question

Suppose that in Zambia, people consume only two goods, peas and beans. Suppose that John, a citizen in that country has an income of ZMW10, the price of beans is 20N per kg, and the price of peas is 40N per kg.

a) Suppose that John consumes 30 kg of beans. Assume that he wants to spend all his income, how many kg of peas is he going to consume?

a) 5 kg
b) 7.5 kg
c) 10 kg
d) 15 kg

Answer 1

The answer of the given statement that "the kg of peas is he going to consume" is b) 7.5 kg

Step-by-step explanation:

To find out how many kg of peas John is going to consume, we can use the budget constraint equation, which is given by:

`\[ \text{Income} = (\text{Price of Beans} * \text{Quantity of Beans}) + (\text{Price of Peas} * \text{Quantity of Peas}) \]`

Given:

- Income (I) = ZMW10

- Price of Beans (Pb) = 20N per kg

- Quantity of Beans (Qb) = 30 kg

- Price of Peas (Pp) = 40N per kg

- Quantity of Peas (Qp) is what we want to find.

\[ 10 = (20 \times 30) + (40 \times Qp) \]

Solving for Qp:

\[ 10 = 600 + 40Qp \]

\[ 40Qp = -590 \]

\[ Qp = -14.75 \]

John cannot consume a negative quantity, so we need to interpret the negative value as spending less on peas and having more income left. Therefore, John will spend 7.5 kg on peas.

Therefore, the correct answer is b) 7.5 kg.