Question

If a consumer has an income of $200, the price of X is $5, and the price of Y is $10, the maximum quantity of X the consumer is able to purchase is:

A. 10 units of X
B. 20 units of X
C. 25 units of X
D. 40 units of X

Answer 1

When a consumer has $200 and the price of good X is $5, they can purchase a maximum of 40 units of good X by dividing their income by the price per unit.

Step-by-step explanation:

If a consumer has an income of $200, the price of X is $5, and the price of Y is $10, the maximum quantity of X the consumer is able to purchase is simply determined by dividing the total income by the price of one unit of X.

Maximum quantity of X = Income / Price of X = $200 / $5 per unit of X = 40 units of X.

Thus, the correct answer is D. 40 units of X. This is the maximum number of units of good X that the consumer can buy if they use all their income for purchasing good X and none on good Y.