Tonya's budget constraint for gasoline (G) and clothes (C) each month can be expressed with the equation G = 100 - 2C. If the price of clothing is $10, which of the following consumption bundles lies INSIDE Tonya's budget line?
A) 50 units of clothing and 100 units of gasoline
B) 50 units of clothing and 0 units of gasoline
C) 0 units of clothing and 100 units of gasoline
D) 10 units of clothing and 5 units of gasoline

Question

Quizplus · Accepted Answer

Tonya's budget constraint is G = 100 - 2C. For 10 units of clothing (C = 10), G = 100 - 2(10) = 80. The bundle (10, 5) lies inside the budget line because it requires only 5 units of gasoline, which is less than the 80 units she can afford.

Tonya's Budget Constraint for Gasoline (G) and Clothes (C) Each