This is the first 1,000 characters of 2042 words (8.17 pages) in the essay titled Economics Junk
A) If a consumer has a certain income and at this level of income the consumer prefers to purchase 50 units of y and 0 units of X, if the price of good Y is $10, then the consumers income is $10*units of Y.
Disposable income= $10*y =$10*50 =$500.
B) If the same consumer wished to purchase 40 units of X and 0 units of Y, the price of good X would be disposable income divided by the number of units to be purchased.
Cost of good X= disposable income/units of X =$500/40 =$12.5
C) The equation for the budget line is calculated using the prices for each good and the disposable income. The disposable income is equal to the cost of good X multiplied by the amount of X purchased, plus the cost of good Y multiplied by the amount of Y purchased. To find the equation of the budget line, solve for Y.
D) The consumer would choose the point where the budget line i...
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