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Suppose the consumer have 15 rupees to spend on purchasing two goods namely x1x_1 and x2x_2 where the price of x1x_1 is 2.50 and price of x2x_2 is 1.50 then what is the maximum quantity of x1x_1 and x2x_2 at which the consumer's budget line will intersect the axis of the graph if x1x_1 and x2x_2 are represented in the vertical axis and horizontal axis of the graph respectively.

Solution

✅ Correct Option: 3

An axis intercept is found by spending the whole income on one good. Maximum x1=152.50=6x_1 = \frac{15}{2.50} = 6 on the vertical axis and maximum x2=151.50=10x_2 = \frac{15}{1.50} = 10 on the horizontal axis. So the budget line meets the axes at x1=6x_1 = 6 and x2=10x_2 = 10.

2023: 28 May Shift 2

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