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in Economics by (57.2k points)

A consumer wants to consume two goods. The price of bananas is Rs.4 and price of mangoes is Rs.5. The consumer income is Rs.20. 

1. How many bananas can she consume if she spend her entire income on that good? 

2. How many mangoes can she consume if she spend her entire income on that good? 3. Is the slope of budget line is downward or upward? 

4. Are the bundles on the budget line equal to the consumers’ income or not? 

5. If you want to have more of banana, you have to give up mangoes. Is it true?

1 Answer

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Best answer

1. 5 Bananas (20/4). 

2. 4 Mangoes (20/5). 

3. Slope of budget line is downward. 

4. Yes, the bundles on the budget line are equal to the consumer’s income. 

5. True, if we want to have more of banana we have to give up mangoes.

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