Question 9

Suppose a consumer wants to consume two goods which are available only in
integer units. The two goods are equally priced at Rs 10 and the consumer’s
income is Rs 40.
(i) Write down all the bundles that are available to the consumer.
(ii) Among the bundles that are available to the consumer, identify those which cost her exactly Rs 40.

Answer

P1 = Rs.10
P2= Rs.10
M = Rs. 40
Budget set = P1X1+P2x2≤ M
10X1+10x2 ≤ 40
The bundles that are available to the consumer should cost less than or equal to Rs40.
Horizontal intercept =

Vertical intercept =

Slope =
The bundles in the shaded region (∆AOB) are all available
to the consumer, including the bundles lying on the line
AB.
(0, 0) (0, 1) (0, 2) (0, 3) (0, 4)
(1, 0) (1, 1) (1, 2) (1, 3) (1, 4)
(2, 0) (2, 1) (2, 2) (2, 3) (2, 4)
(3, 0) (3, 1) (3, 2) (3, 3) (3, 4)
(4, 0) (4, 1) (4, 2) (4, 3) (4, 4)

(ii) The coordinates that lie on the line AB cost exactly the same as the income of the consumer. The bundles are as follows:
(0,4) (1,3) (2,2) (3,1) (4,0)

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