menu
bartleby
search
close search
Hit Return to see all results

Suppose the price of A is $20 per unit, the price of B is $10 per unit, and theconsumer’s income is $1000 per month. Which of the following baskets is not on theconsumer’s budget line?a)  A = 40, B = 20b)  A = 5, B = 90c)  A = 2.5, B = 95d)  A = 20, B = 40

Question

Suppose the price of A is $20 per unit, the price of B is $10 per unit, and theconsumer’s income is $1000 per month. Which of the following baskets is not on theconsumer’s budget line?

  1. a)  A = 40, B = 20

  2. b)  A = 5, B = 90

  3. c)  A = 2.5, B = 95

  4. d)  A = 20, B = 40

check_circleAnswer
Step 1

Utility:

The utility is the power or ability of the goods and services that satisfy the consumers want. Alternatively, the satisfying power of commodity is called utility.

Step 2

The option d (A = 20, B = 40) is not on the consumer’s budget line. While option a, b and c is on the budget line.

To find the correct basket we need to put all the given baskets simultaneously in the budget line (I = PaA  + PbB) and verify the condition. Since all the basket satisfies the budget line except option d.

Solution for option d,

Pr...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Our solutions are written by experts, many with advanced degrees, and available 24/7

See Solution
Tagged in

Business

Economics

Economic Growth

Related Economics Q&A

Find answers to questions asked by student like you

Show more Q&A add
question_answer

Q: Monika eats only steak and carrots for dinner. A serving of steak gives 250 calories and 10 units of...

A: It is given that,1 unit of serving steak = 250 calories + 10 Vitamins                    1 unit of s...

question_answer

Q: In three sentences or less, describe the difference between an illiquid commercial bank and an insol...

A: An illiquid commercial bank means she does not have resources available to meet her current obligati...

question_answer

Q: 3. A canonical utility function. Consider the utility function u(c) 1-σ where c denotes consumption ...

A: Since we are entitled to answer up to 3 sub-parts, we’ll answer the first 3 as you have not mentione...

question_answer

Q: "When there is low inflation, it will be backed by low interest and an appreciated currency and not ...

A: When the inflation is low, the interest rates will be low, so that people borrow and spend more and ...

question_answer

Q: Additional questions:The labor cost per day of hiring two workers is $_____?The total cost per day w...

A: Fixed costs are the costs that do not vary with the level of output. Rent, interest payments, etc. a...

question_answer

Q: Oil prices have fallen quite substantially since 2008.  Moreover, the deveopment of new sources of o...

A: After the 2008 global economic crises, the United States landscape has shifted too dramatically driv...

question_answer

Q: If banks decide to hold some of their excess reserves instead of lending them all out, then:   ...

A: Excess Reserves are bank-held capital reserves that exceed the minimum reserve requirement set by a ...

question_answer

Q: Eric earns a base salary of $50,000 as a shipwreck diver and is subject to the following hypothetica...

A: Marginal tax rate on drive:Eric already earns the $50,000, so an extra earning income $5,000 above t...

question_answer

Q: We often work with production technologies that give rise to initially increasing marginal product o...

A: Production technology:True, because the slope of the production frontier is equal to the marginal pr...

Sorry about that. What wasn’t helpful?