if you have an income of $80 to spend, if commodity 1 costs $4 per unit, and if commodity 2 costs $16 per unit, then the equation for your budget line can be written A)x₁ + 4x₂ = 20. B)(x₁ + x₂)/20 = 80. C)x₁/4 + x₂/16 = 80. D)5x₁ + 17x₂ = 81. E)20(x₁ + x₂) = 80.

Question

Quizplus · Accepted Answer

The budget line equation is derived from the total income divided by the price of each commodity. Here, $80 = 4x₁ + 16x₂, which simplifies to x₁ + 4x₂ = 20.

If You Have an Income of $80 to Spend, If