What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and P_x = $10,P_y = $15,X = 30,and M = 600? A) 10 B) 15 C) 20 D) 25

Question

Quizplus · Accepted Answer

To maximize the amount of good Y that can be purchased we need to allocate all the budget towards good Y. Using the budget constraint, we can solve for the maximum amount of Y that can be purchased:

M = PX1X + PY1Y 
600 = 10(30) + 15Y 
600 = 300 + 15Y 
300 = 15Y 
Y = 20

Therefore, the maximum amount of good Y that can be purchased is 20. Choice C is the correct answer.

What Is the Maximum Amount of Good Y That Can