a consumer wants to consume two goods:Good A and Good B. Good A is priced at 2 per unit and Good B at 4 per unit. The income of the consumer is fixed at Rs20.
1.the bundles that are available to consumer?
2. find out the bundles which cost exactly rs20

(i) P₁ = Rs 2

P₂ = Rs 4

M = Rs 20

Budget set ⇒ P₁x₁ + P₂x₂ ≤ M

2x₁ + 4x₂ ≤ 20

The bundles that are available to the consumer should cost less than or equal to Rs 20.

 $$\begin{gathered} \mathrm{Horizontal} \mathrm{intercept}=\frac{M}{P_1}=\frac{20}{2}=10 \\ \mathrm{Vertical} \mathrm{intercept}=\frac{M}{P_2}=\frac{20}{4}=5 \\ \mathrm{Slope}=-\frac{P_1}{P_2}=-\frac{2}{4}=-0.5 \end{gathered}$$​

The bundles that are available to the consumer, including the bundles lying on the budget line.

(0, 0)	(0, 1)	(0, 2)	(0, 3)	(0, 4)	(0, 5)
(2, 0)	(2, 1)	(2, 2)	(2, 3)	(2, 4)	(2, 5)
(4, 0)	(4, 1)	(4, 2)	(4, 3)	(4, 4)	(4, 5)
(6, 0)	(6, 1)	(6, 2)	(6, 3)	(6, 4)	(6, 5)
(8, 0)	(8, 1)	(8, 2)	(8, 3)	(8, 4)	(8, 5)

(10, 0)

(10, 1)

(10, 2)

(10, 3)

(10, 4)

(10, 5)

(ii) The coordinates that lie on the line AB cost exactly the same as the income of the consumer. The bundles are as follows:

(0, 5), (2, 4), (4, 3), (6, 2), (8, 1), (10,0)