Budget constraint

The slope of the budget line represents

• the quantity of the good 𝑦 that the consumer is willing to give up for one more unit than good 𝑥

• the quantity of the good 𝑥 that the consumer is willing to give up for an additional unit of good 𝑦

• the quantity of the good 𝑦 that the consumer must renounce in order to purchase one more unit of the good 𝑥

• none of the previous answers are correct

A consumer buys only two goods 𝑥 and 𝑦. The cost of good 𝑥 is € 4 and the cost of good 𝑦 is €3. If this consumer spent all his weekly income on good 𝑦, he would buy 12 units. If he spent all his income on good 𝑥, how many units per week could he buy? Motivate the answer.

All consumer bundles that lie below the budget line:

• they are unobtainable bundles

• they are obtainable and efficient bundles

• they are obtainable but inefficient bundles

• they can represent an excellent choice for the consumer

• none of the previous answers are correct

Consider a consumer who spends his income R for the purchase of the two goods 𝑥 and 𝑦 at prices 𝑝𝑥,𝑝𝑦. By spending his entire income, the consumer can buy a bundle given by 𝑥 = 40 and 𝑦 = 60, or a basket given by 𝑥 = 70 and 𝑦 = 30. Which of the following statements are correct?

• The consumer can purchase a maximum of 100 units of 𝑥.

• The consumer can purchase a maximum of 100 units of 𝑦.

• The slope of the budget constraint is equal to -1.

• The consumer's income is equal to 100.

• None of the above statements are correct.

If you have a budget of 40 euros to spend on two goods 𝑥 and 𝑦 and the good 𝑥 costs 4 euros per unit and the good 𝑦 costs 20 euros per unit, the equation of your budget constraint can be written as

• Answer c and d is correct

The intercept of the budget constraint on the abscissa axis measures

• the maximum utility that the consumer can achieve if he consumes only the good 𝑥

• the maximum quantity of the good 𝑦 that the consumer can buy when 𝑥 = 0

• the maximum quantity of the good 𝑥 that the consumer can buy when 𝑅 = 0

• none of the previous answers are correct