Shahzaib A.

asked • 01/08/17

a. Plot the budget line with vertical and horizontal intercepts?

Q 3. Suppose an individual has an income of $20 per time period, the price of good X is $2 and the price of good Y is also $4. That is, I = $20 , PX = 2, and PY = $4.

Andrew M.

We have $20 available and two goods which cost $2 and $4...
But you have not stated what you are trying to determine.
Are there limiting criteria that is left out?
 
All we know at the moment is that
2x + 4y ≤ 20  where X is the $2 product and Y is the $4 product
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01/08/17

1 Expert Answer

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Andrew M. answered • 01/08/17

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Mathematics - Algebra a Specialty / F.I.T. Grad - B.S. w/Honors

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We can plot the line
2x + 4y = 20
 
x      y
---------
0      5          vertical intercept
10    0          horizontal intercept
 
If we buy none of product X we can purchase 5 of product Y
If we buy none of product Y we can purchase 10 of product X
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