Question

A farmer is given $100 to buy 100 farm animals a cow cost $1.00 a sheep cost $.50 and a horse cost $1.00 how can the farm spend the money without going over

Answer 1

Few animal combinations of 3 animals given income & prices :- Only one of cow, horse, or ship bought ; less than 100 , 200 , 200 respectively.

Explanation:

Budget Set is the combination of goods, which can be afforded by a consumer, given money income & prices.

Given : Budget Income = 100

Cow Price (C) = 1 ; Sheep Cost (S) = 0.5 ; Horse Cost (H) = 0.5

Maximum number of either cow, or sheep, or horse only that Farmer can buy with given prices & budget income (not buying the other ones):-

• C = 100 / 1 = 100
• S = 100 / 0.5 = 200
• H = 100 / 0.5 = 200

So, some animal combination, that farmer can buy with available income budget & given prices :-

• ( C , 0 , 0 ) ; where C < 100
• ( 0 , S , 0 ) ; where S < 200
• ( 0 , 0, H ) ; where H < 200