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Chapter 2: Q23 (page 44)

Marie has a weekly budget of \(24, which she

likes to spend on magazines and pies.

If the price of a magazine is \)4 each, what is

the maximum number of magazines she could buy in a

week?

Short Answer

Expert verified

Marie can buy maximum 6 units of magazines with this money income

Step by step solution

01

Basic Concept 

Budget Constraint shows the product combinations that a consumer can afford to buy, with given money income and prices.

Budget line shows the product combinations which fully spend the consumer's money income

The equation : when x & y are quantities of two goods & px, py are their respective prices, and m is money income :

x px + y py = m

02

Detailed Explanation

The intercept of budget line shows the maximum quantity of a good, consumer can purchase with given money income & price.

Intercept Formula = Income / Price of the good

m / p i

  • Here, maximum number of magazines priced at $4, that can be purchased with income 24 = 24 / 4 = 6 units

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