Asked by Charles Johnson on May 14, 2024
Verified
Refer to Figure 21-17. Suppose Budget Constraint B applies. If the consumer's income is $90 and if he is buying 5 light bulbs, then how much money is he spending on hamburgers?
Budget Constraints
The limitations on the consumption bundles that a consumer can afford based on their income and the prices of goods and services.
- Determine the consumer's earnings and the cost of products given financial restrictions.
Verified Answer
NS
Naved SulaimanMay 20, 2024
Final Answer :
If income is $90, then the price of a light bulb is $90/15 = $6. He is then spending ($6)(5) = $30 on light bulbs, so he is spending $90 - $30 = $60 on hamburgers. (The price of a hamburger is $90/9 = $10 and he is buying 6 hamburgers.)
Learning Objectives
- Determine the consumer's earnings and the cost of products given financial restrictions.