
Concept introduction:
Budget Line: It is defined as the combination of all goods that a consumer can buy exhausting his all income. Formula for the budget line is:

Here,
is the quantity of good X.
is the quantity of good Y.
is the total income.
is the
price of good X.is the price of good Y.
is the marginal utility.
is the total utility.
- X is the quantity of any good.
- N is the number of goods.
is the marginal utility per dollar.
is the price of good X.
is the marginal utility of good X.
is the marginal utility of good Y.
is the price of good X.
is the price of good Y.


Here,
Marginal Utility per dollar: It is the ratio of marginal utility to that of the price of a good. The formula to calculate the marginal utility per dollar is:


Here,
Maximizing utility in the case of two goods: It states that the equilibrium level of consumption of two goods for a consumer is achieved when the marginal utility per dollar of the two goods are equal. This means that the following conditions must be fulfilled:

Here,

Want to see the full answer?
Check out a sample textbook solution
Chapter 10 Solutions
Economics
- Critically analyse the five (5) characteristics of Ubuntu and provide examples of how they apply to the National Health Insurance (NHI) in South Africa.arrow_forwardCritically analyse the five (5) characteristics of Ubuntu and provide examples of how they apply to the National Health Insurance (NHI) in South Africa.arrow_forwardOutline the nine (9) consumer rights as specified in the Consumer Rights Act in South Africa.arrow_forward
- In what ways could you show the attractiveness of Philippines in the form of videos/campaigns to foreign investors? Cite 10 examples.arrow_forwardExplain the following terms and provide an example for each term: • Corruption • Fraud • Briberyarrow_forwardIn what ways could you show the attractiveness of a country in the form of videos/campaigns?arrow_forward
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education





