How to solve these type of questions: 8 Suppose a consumer can afford to buy 6 units of - Economics - Theory of Consumer Behaviour

Question

How to solve these type of questions:

8 Suppose a consumer can afford to buy 6 units of good 1 and 8
units of good 2 if she spends her entire income The prices of the
two goods are Rs 6 and Rs 8 respectively How much is the consumer's
income?
Hint: Suppose, the equation of budget line is
pxx+pyY=M
(Where X= good 1; Px=Price of x; Y=good 2;
Py=Price of Y; and M=Income)
Putting values in the equation, we get;
Rs 6x6+Rs 8x8=m, i e Income (M) = Rs 100

Sanjari Kalantri · Accepted Answer

Dear Student,

The consumer purchases 6 units of good 1, which is priced at Rs
 6 each
So, consumer's expenditure on good 1 = Rs
 6 × 6 = Rs
 36The consumer also purchases 8 units of good 2, which is priced at Rs
 8 each
So, consumer's expenditure on good 2 = Rs
 8 × 8 = Rs  64
Total expenditure by consumer = Expenditure on good 1 + expenditure on good 2 = 36 + 64 = Rs
 100Since, consumer spends her entire income, her income = Rs
 100
We can use the equation of the budget line to solve this problem taking x as good 1 and y as good 2:xPx + yPy = m, where x and y are the number of units of the two goods purchased, Px and Py are the prices per unit of each of the two goods, and m is the consumer's income
Here, x = 6 units, Px = Rs
 6, y = 8 units, Py = Rs
 8 and m = ?Substituting into equation of budget line,6 × Rs
 6 + 8 × Rs
 8 = m = Rs  36 + Rs
 64 = Rs  100