Suppose a consumer wants to consume two goods which are available only

1.	Suppose a consumer wants to consume two goods which are available only in integer units. The two goods are equally priced at 10 and the consumer's incomes are RS.40. (i) Write down all the bundles that are available to the consumer. (ii) Among the bundles that are available to the consumer, identify those which cost her exactly Rs.40
Answer» Let P_x= P_y=10 Income :40 (i) Bundles available to consumer are: (0,0), (0,1), (0,2), (0,3), (0,4), (L,0), (1,1), (1.,2), (1,3), (1,4), (2,0), (2,1), (2,2), (3,0), (3,1) and (4,0). (ii) (0,4), (1.,3), (2,2), (3,1) and (4,0) cost exactly 40. All other bundles cost less than Rs.40

Suppose a consumer wants to consume two goods which are available only in integer units. The two goods are equally priced at 10 and the consumer's incomes are RS.40. (i) Write down all the bundles that are available to the consumer. (ii) Among the bundles that are available to the consumer, identify those which cost her exactly Rs.40

Answer»

Let P_x= P_y=10

Income :40

(i) Bundles available to consumer are:

(0,0), (0,1), (0,2), (0,3), (0,4), (L,0), (1,1), (1.,2), (1,3), (1,4), (2,0), (2,1), (2,2), (3,0), (3,1) and (4,0).

(ii) (0,4), (1.,3), (2,2), (3,1) and (4,0) cost exactly 40. All other bundles cost less than Rs.40