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If you could exactly afford either 2 units of x and 7 units of y, or 4 units of x and 3 units y,...

Question:

If you could exactly afford either 2 units of x and 7 units of y, or 4 units of x and 3 units y, then if you spent all of your income on y, how many units of y could you buy?

Income:

Income relates to the amount of money, which is achieved by an organization or an individual in exchange for the services provided by them. It may be helpful in supporting the day-to-day expenses.

Answer and Explanation:

One can consume 4 units of x and 3 units of y or units of x and 7 units of y.

Now,

When x decreases by 2 units i.e. from 4 to 2, y increases by 4 i.e. from 3 to 7.

If considering the consumer at bundle 2 units of x and 7 units of y, and if the consumption of x again is reduces by 2 units i.e. from 2 to 0, then the consumption of y may increase by 4 units i.e. from 7 to 11.

Thus, of one spends all the income on y, one could buy 11 units of y.


Learn more about this topic:

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Operations of an Income Statement

from Accounting 101: Financial Accounting

Chapter 8 / Lesson 5
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