-Lizzie's budget line is shown in the figure above. If Lizzie's income is $20, which of the following formulas represents her budget equation? A) Q_C = 20 + Q_M B) Q_C = 20 - Q_M C) Q_C = -20 + 2 Q_M D) Q_C = 20 - 2Q_M

Question

Quizplus · Accepted Answer

The budget equation is derived from the budget line, which represents the trade-off between two goods given a fixed income. If Lizzie's income is $20, and assuming the price of good M is twice that of good C, the equation would be Q_C = 20 - 2Q_M.

-Lizzie's Budget Line Is Shown in the Figure Above