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 price of the two goods are Rs 6 and Rs 8 respectively. How much 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 price of the two goods are Rs 6 and Rs 8 respectively. How much is the consumer's income ?
Answer» Solution :Suppose, the equation of budget line is `P_(X) X + P_(Y)Y = M` (Where X = GOOD 1, `P_(X)` = PRICE of `X, Y =` good 2, `P_(Y)` = price of Y, and M = INCOME) Putting values in the equation, we get: Rs `6 xx 6 + Rs 8 xx 8 = M`, i.e., Income (M) = Rs 100