# Answer to Question #57042 in Microeconomics for david

Question #57042

Jack spends his whole budget and purchases 8 units of hamburger and 5 units of cake. The price of hamburger is twice the price of cake. The consumerâ€™s income doubles and the price of cake doubles, but the price of hamburger stays the same. If the consumer continues to buy 5 units of cake, what is the largest number of hamburger that he can afford?

Expert's answer

Jack purchases 8 units of hamburger Qh = 8 and 5 units of cake Qc = 5, Pc = 2Ph, I = 8Ph + 5Pc Inew = 2I, Pc(new) = 2Pc, so Pc(new) = 4Ph

If the consumer continues to buy 5 units of cake, then the largest number of hamburger that he can afford will be:

I = 8Ph + 5Pc = 8Ph + 10Ph = 18Ph

Inew = 2I = 5Pc(new) + Qh*Ph = 20Ph + Qh*Ph

18Ph*2 = 20Ph + Qh*Ph

16Ph = Qh*Ph

Qh = 16 - is the largest number of hamburger that Jack can afford after increase in income.

If the consumer continues to buy 5 units of cake, then the largest number of hamburger that he can afford will be:

I = 8Ph + 5Pc = 8Ph + 10Ph = 18Ph

Inew = 2I = 5Pc(new) + Qh*Ph = 20Ph + Qh*Ph

18Ph*2 = 20Ph + Qh*Ph

16Ph = Qh*Ph

Qh = 16 - is the largest number of hamburger that Jack can afford after increase in income.

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