(adsbygoogle = window.adsbygoogle || []).push({}); 1. The problem statement, all variables and given/known data

Your budget is such that if you spend your entire income, you can afford either 4 units of good x and 6 units of good y OR 12 units of x and 2 units of y.

A) What is the ratio of the price of x to the price of y?

B) If you spend all your income on x, how much x could you buy?

2. Relevant equations

Budget line: p1x1 + p2x2 = m

m = income

p1 = price of x

p2 = price of y

x1 = good x

x2 = good y

3. The attempt at a solution

The two budget lines (which are equal) will be:

4(p1) + 6(p2) = m

12(p1) + 2(p2) = m

So would the ratio be 4/12 = 6/2 ?

And I have no clue about B). Do I have to solve for anything? Using subsitution doesn't solve anything. I still up end up with variables.

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# Homework Help: Budget line manipulation

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