Suppose a consumer wants to consume two commodities both of which are available only in discrete units. Let the prices of the goods be Rs 4 and Rs 3 respectively. The consumer's income is Rs 10.
The consumer's budget set is
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Suppose a consumer wants to consume two commodities both of which are available only in discrete units. Let the prices of the goods be Rs 4 and Rs 3 respectively. The consumer's income is Rs 10. The consumer's budget set is (A) {(x₁, x₂) | 4x₁ + 3x₂ ≤ 10 and x₁, x₂ ≥ 0} (B) {(0, 0), (0, 1), (0, 2), (0, 3), (1, 0), (1, 1), (1, 2), (2, 0)} (C) {(0, 1), (0, 2), (0, 3), (1, 0), (1, 1), (1, 2), (2, 0)} (D) {(1, 2)}
Budget constraint and consumer equilibrium has come up 99 times in 7 exams since 2004.
This question is on Non-standard budgets: bundles, rationing and quantity limits, part of Budget constraint and consumer equilibrium in Microeconomics.
Budget sets with bundled offers, tie-ins, quantity caps, block prices or liquidity constraints.
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Question from the JNU SSS 2010 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.