   # The equation for a budget line for goods X and Y , with P x being the price of X , P y being the price of Y , and B being the budget, can be written as a. P x X + P y Y = B . b. P x X + P y Y = 1/ B . c. P x X = B + P y Y . d. P x X / P y Y = 1 – B . ### Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040

#### Solutions

Chapter
Section ### Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040
Chapter 6.A, Problem 8SQ
Textbook Problem
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## The equation for a budget line for goods X and Y, with Px being the price of X, Py being the price of Y, and B being the budget, can be written as a. PxX + PyY = B. b. PxX + PyY = 1/B. c. PxX = B + PyY. d. PxX/PyY = 1 – B.

To determine

The budget line of the consumer.

### Explanation of Solution

The budget line indicates all the combinations of the two commodities that the consumer can consume with the given income and the price levels within the level of income.

Option (a):

The budget is the income of the consumer and the different combinations of the two commodities that the consumer can consume with the income is indicated by the budget line. Thus, the price of the good multiplied with the quantity of the good is added to the price multiplied with the quantity of the second good to give the total budget of the consumer at any point on the budget line. This means that option 'a' is correct.

Option (b):

The price of the good multiplied with the quantity of the good is added to the price multiplied with the quantity of the second good to give the total budget of the consumer at any point on the budget line. Thus, it does not give 1/B. Therefore, option 'b' is incorrect...

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