Suppose that a consumers income or budget is 245 the price o

Suppose that a consumer’s income or budget is $245, the price of good A is $3.54/unit, and the price of good B is $8.59/unit. If we graph consumption of good A, QA, on the horizontal axis, and consumption of good B, QB, on the vertical axis, the budget line will intersect the A axis at a quantity of:

A

Solution

Ans : B ) 69. 2 units

Explanation:

Quantity of good A is measured in A axis ( horizontal ) and quantity of good B is measured in B axis ( vertical ).

Price of good A = $ 3.54 per unit , price of good B = $ 8.59 per unit

Consumer’s income or budget is $245 .

If the consumer spend whole money in purchase of goog A , then the total quantity will be purchased ;

= $ 245 / $ 3.54 = 69.2 units

If the consumer spend whole money in purchase of goog B, then the total quantity will be purchased ;

= $ 245 / $ 8.59 = 28.5 units

Then , the budget line will intersects A axis at 69.2 units and B axis at 28.5 units.