Suppose you have ​$180 to spend on CDs and movies. The price of a CD is ​$15, and the price of a movie is ​$55

Suppose you have ​$180 to spend on CDs and movies. The price of a CD is ​$15, and the price of a movie is ​$55. what is the maximum movies you can afford.

 

 

 

answer:

lets the cd’s be ‘x’ and movies be ‘y’ therefore x+y=180

price of 1 cd is $ 15 hence the maximum of cd’s that a consumer can buy are = 180/15 =12

and the maximum of movies that he can afford are = 180/55 ~ 3.7

hence the budget line will intersect x at 12 coreesponding to zero consumption of y and y would intersect at 3.7 corresponding to zero purchase of x.

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