Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

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.

Options:

5X + 12Y= 100

10X + 5Y= 100

5QX + 10QY = 100

10QX + 5QY = 100

Correct Answer:

5QX + 10QY = 100

Explanation:

The correct answer is Option (3) → 5QX + 10QY = 100

The equation of the budget line is given by: PXQX+PYQY=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.