Hilda buys only cauliflower, Q_c, and geraniums, Q_g. The equation for Hilda's initial budget line is $40 = $2 × Q_c + $4 × Q_g. If Hilda's income increases by $20, the price of cauliflower decreases by $1, and the price of geraniums increases by $1, the equation of her new budget line is ________. A) $60 = $1 × Q_c + $5 × Q_g B) $60 + $1 × Q_c = $5 × Q_g C) $0 = $60 + $1 × Q_c + $5 × Q_g D) $60 = $5 × Q_c - $1 × Q_g

Question

Quizplus · Accepted Answer

Hilda's new budget line equation can be calculated as follows: New income = Initial income + increase = $40 + $20 = $60 New price of cauliflower = Initial price - decrease = $2 - $1 = $1 New price of geraniums = Initial price + increase = $4 + $1 = $5 Therefore, the new budget line equation is: $60 = $1 × Q_c + $5 × Q_g This matches answer choice A.

Hilda Buys Only Cauliflower, Qc, and Geraniums, Qg

Hilda Buys Only Cauliflower, Q_c, and Geraniums, Q_g