Your budget constraint for the two goods A and B is 8A + 4B = I, where I is your income.You are currently consuming more than 18 units of B.In order to get 3 more units of A, how many units of B would you have to give up?
A)6
B)0.50
C)0.17
D)2
E)None of the above.

Question

Quizplus · Accepted Answer

To find out how many units of B you would have to give up to get 3 more units of A, we need to look at the budget constraint equation given: 8A + 4B = I. This equation tells us that the price of A is 8 units of income and the price of B is 4 units of income. To get 3 more units of A, you would need 3 * 8 = 24 units of income. Since the price of B is 4 units of income, you would have to give up 24 / 4 = 6 units of B to afford 3 more units of A.

Your Budget Constraint for the Two Goods a and B