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A Consumer Wants to Consume Two Goods. the Prices of the Two Goods Are Rs 4 and Rs 5 Respectively. How Much of Good 2 Can Be Consumed If He/She Spends His/Her Entire Income on that Good? - Economics

Short Note

A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20. 

 How much of good 2 can be consumed if he/she spends his/her entire income on that good?

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Solution

If Rs 20 is entirely spent on good 2, then x1 = 0, as the consumer has no income left to spend on good 1.

4(0) + 5(x2) = 20

5(x2) = 20 

`x_2 = 20/5`

x2 = 4 units  

Amount of good 2 consumed = 4 units

  Is there an error in this question or solution?
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APPEARS IN

NCERT Class 12 Economics Introductory Microeconomics
Chapter 2 Theory Of Consumer Behaviour
Exercise | Q 4.3 | Page 34
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