Tonya's budget constraint for litres of gasoline (G)and shirts (S)each month can be expressed by the equation G = 100 - 2S,where G is the number of litres of gasoline she buys and S is the total number of shirts she buys.Assume that she spends her entire budget each month.If the price of shirts is $10,the price of gasoline is _____ per litre,and the total amount of income spent on both shirts and gasoline each month is _____.
A) $5;$500
B) $2;$100
C) $1;$500
D) $2;$1 000

Question

Quizplus · Accepted Answer

The slope of the budget constraint (-2) indicates the price ratio of shirts to gasoline. If shirts cost $10, gasoline costs $5 per litre. Substituting S = 0 in the budget constraint gives G = 100, so the total income is 100 litres * $5 = $500.

Tonya's Budget Constraint for Litres of Gasoline (G)and Shirts (S)each