Read the report carefully and answer the questions based on the report:
|
Consumer's Budget |
₹100 |
|
Price of Good X |
₹5 per unit |
|
Price of Good Y |
₹10 per unit |
On the basis of given data above, the correct equation of price line will be.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 5QX + 10QY = 100
The equation of the budget line is given by: PX⋅QX+PY⋅QY=M
Where:
-
Px = Price of Good X = ₹5
-
Qx = Quantity of Good x
-
Py = Price of Good Y = ₹10
-
Qy = Quantity of Good y
-
M = Consumer’s Budget = ₹100
Now substitute the values: 5Qx + 10Qy = 100
This represents all combinations of quantities of Good X and Good Y that the consumer can afford with a ₹100 budget.
Note: There appears to be a mistake in question. Instead of budget line, the question has used Price Line.