Answer to Question #330252 in Economics for Pearl

Question

Consumer spends all his or her income on food (X) and clothing (y). The current prices are p1 10 birr and P2 5birr and he or she maximizes utility by purchasing 20 units of X and 50 units of y.find how much he or she will purchase if she or he spends the entire income on x

Answer 1

The consumer's income is:

I = 10*20 + 5*50 = 450 birr.

If she or he spends the entire income on x, then:

Qx = 450/10 = 45 units.