Suppose a consumer spends her income on two goods: iTunes music downloads and books. The consumer has $100 to allocate to these two goods, the price of a downloaded song is $1, and the price of a book is $20. What is the maximum number of books the consumer can purchase?

Question

Quizplus · Accepted Answer

The consumer has $100 and each book costs $20. Therefore, the maximum number of books she can purchase is $100 / $20 = 5 books.

Suppose a Consumer Spends Her Income on Two Goods: ITunes