if you have an income of $16 to spend, if commodity 1 costs $2 per unit, and if commodity 2 costs $4 per unit, then the equation for your budget line can be written A)x₁ +2x₂ = 8. B)3x₁ + 5x₂ = 17. C)(x₁ + x₂)/6 = 16 D)x₁/2 + x₂/4 = 16. E)6(x₁ + x₂) = 16.

Question

Quizplus · Accepted Answer

The budget line equation is derived from the total income and the prices of the commodities: 2x₁ + 4x₂ = 16. Simplifying gives x₁ + 2x₂ = 8.

If You Have an Income of $16 to Spend, If