Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2, if she spends her entire income. The prices of two goods are Rs.6 and Rs.8 respectively. What is the consumer's income ?

Suppose a consumer can afford to buy 6 units of good 1 and 8 units of

1.	Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2, if she spends her entire income. The prices of two goods are Rs.6 and Rs.8 respectively. What is the consumer's income ?
Answer» Solution :EQUATION of budget LINE =`P_1x_1+P_2x_2=M` Here `P_1=Rs.6, P_2=Rs.8, x_1=` 6 units, `x_2`=8 units HENCE `P_1x_1+P_2x_2=6xx6+8xx8` Total expenditure=36+64=100 Hence, total INCOME (M) of the consumer is Rs.100 as `P_1x_1+P_2x_2=M`