dse 2009

[lakshita]

11. Your budget is such that if you spend your entire income on two goods,
x and y, you can afford either 4 units of x and 6 units of y or 12 units
of x and 2 units of y. If you spent all your income on x, how many
units of x could you buy?
a) 7
b) 16
c) 15
d) 18
.....how to do this sir...???..i did this
way--4px+6py=12px+2py........that gives...py=2px....but putting it in
budget constraint isnt giving anything meaningful...

[Amit Goyal]

Let p(x) denotes price of x, p(y) denotes price of y and M denotes Income.
4p(x) + 6p(y) = M
12p(x) + 2p(y) = M
Solve for p(x) and p(y)
p(x) = M/16
p(y) = M/8
Now we can write the budget constraint:
xp(x) + yp(y) = M
as
x(M/16) + y(M/8) = M

Put y = 0 in above and you will get x = 16.