There are 3 goods.The price of good 1 is -1, the price of good 2 is +1, and the price of good 3 is +2.It is physically possible for a consumer to consume any commodity bundle with nonnegative amounts of each good.A consumer who has an income of 10 could afford to consume some commodity bundles that include 5 units of good 1 and 6 units of good 2.

Question

Quizplus · Accepted Answer

Since the consumer has an income of 10 and can afford to consume some commodity bundles with 5 units of good 1 and 6 units of good 2, we can set up the following equation:

10 = 5(F1S1 - F101) + 6(F1S1 + F101)

Simplifying, we get:

10 = 11F1S1 + F101

This means that as long as F1S1 and F101 are chosen such that they satisfy this equation, the consumer can afford to consume 5 units of good 1 and 6 units of good 2. Since we have no restrictions on the values of F1S1 and F101, it is physically possible for the consumer to consume such bundles. The price of good 3 is irrelevant to this calculation. Therefore, the answer is A.

There Are 3 Goods