If Sam has $80.00 each week to spend on tacos and magazines, and their respective prices are $.50 per taco and $4.00 per magazine, which of the following equations represents his budget line? A) $80.00 = $.50/Q_t + $4.00/Q_m B) $80.00 = Q_t/Q_m + $.50 /$4.00 C) $80.00 = $.50(Q_m) + $4.00(Q_t) D) $80.00 = $.50(Q_t) + $4.00(Q_m)

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Quizplus · Accepted Answer

The equation should represent Sam's budget line, or the possible combinations of tacos and magazines that he can afford given his budget constraint. The equation should have the form: total budget = price of tacos x quantity of tacos + price of magazines x quantity of magazines. Therefore, the correct equation is $80.00 = $.50(Q_t) + $4.00(Q_m). Choice A is incorrect because it divides the budget by the sum of the quantities, which is not the correct way to represent budget constraint. Choice B is incorrect because it swaps the variables and does not multiply them by the correct prices. Choice C is incorrect because it only multiplies the price and quantity of magazines, and not both tacos and magazines.

If Sam Has $80