George has a weekly income (I)of $50,which he uses to purchase doughnuts (D)and coffee (C).If the price of a doughnut is $1 and the price of coffee is $2.50,which consumption bundle lies BEYOND George's budget constraint?
A)10C and 25D
B)15C and 15D
C)5C and 10D
D)5C and 5D

Question

Quizplus · Accepted Answer

George's weekly income is $50. The cost of the consumption bundles are calculated as follows: A) $25 (for coffee) + $25 (for doughnuts) = $50, B) $37.50 (for coffee) + $15 (for doughnuts) = $52.50, C) $12.50 (for coffee) + $10 (for doughnuts) = $22.50, D) $12.50 (for coffee) + $5 (for doughnuts) = $17.50. Only option B exceeds George's budget of $50.

George Has a Weekly Income (I)of $50,which He Uses to Purchase