Question

If the consumer's budget constraint is given by 4P + 2B = 50 where P is Pizza and B is Burgers, the following bundles of Pizza and Burger would be on the budget constraint:

P = 5;  B = 10

P = 2; B = 21

P = 10; B = 20

P = 2; B = 24

Answer 1

Answer - Consumer's budget constraint is, 4P + 2B = 50. If the bundle lies on the budget line then it must satisfy the equation. We have been given 4 bundles. Put values of 'P' and 'B' into the budget constrain one by one.

For bundle (P, B) = (5 , 10)

4*5 + 2*10 = 50

20 + 20 = 50

40 = 50

Left hand side is not equal to right hand side. Thus we can say that this bundle will lie left (inside) to the budget line if drawn.

Now, bundle (P, B) = (2, 21)

4*2 + 2*21 = 50

8 + 42 = 50

50 = 50

Here LHS is equal to RHS. Thus we can say this bundle will lie on the budget line.

The bundle (P, B) = (10, 20)

4*10 + 2* 20 = 50

80 = 50

LHS is not equal to RHS. Thus the bundle will not lie on the budget line.

Now, bundle is (P, B) = (2, 24)

4*2 + 2* 24 = 50

8 + 48 = 50

56 = 50

LHS is not equal to RHS. Thus we can say that this bundle will not lie on the budget line.