Assume the price of good X is P_x, price of good Y is P_y, and B is the budget. The formula for the budget line for these two goods is: A) P_yQy / P_xO_x. B) P_xB + P_yB = B. C) P_xX + P_yY = B. D) (1 − P_y / B) P_x.

Question

Quizplus · Accepted Answer

The formula for the budget line is P_xX + P_yY = B. This is because the budget B is allocated between goods X and Y, and the sum of their prices multiplied by their respective quantities cannot exceed the budget. Therefore, the correct formula for the budget line is C.

Assume the Price of Good X Is Px, Price of Good

Assume the Price of Good X Is P_x, Price of Good