A consumer has $50 to spend.He has to decide between buying two goods: magazines priced at $5 each and DVDs priced at $10 each.Which of the following combinations of the two goods will entirely exhaust his budget constraint?
A) 3 magazines and 4 DVDs
B) 2 magazines and 4 DVDs
C) 6 magazines and 1 DVD
D) 2 magazines and 2 DVDs

Question

Quizplus · Accepted Answer

If the consumer buys 3 magazines, that will be a total cost of 3 x $5 = $15. Then he will only be able to afford 1 DVD which costs $10, which will leave him with $25 remaining. If he buys 6 magazines instead, that will cost 6 x $5 = $30, which will leave him with only $20. Therefore, option A and C are not viable.
If the consumer buys 2 magazines and 4 DVDs, that will be a total cost of 2 x $5 + 4 x $10 = $50, which means that his entire budget constraint will be exhausted. Therefore, option B is the best choice. 
If he buys 2 magazines and 2 DVDs instead, that will cost 2 x $5 + 2 x $10 = $30, which means he will still have $20 remaining. Therefore, option D is not the best choice.

A Consumer Has $50 to Spend