14. Consider the budget constraints and consumption bundles shown for Jim to the right. Jim initially has $80 per month to spend on goods X and Y. The initial price of X is $1 and the price of Y is $2. What is the value of A?

   We know that Jim's income is $80, that the price of X is $1 and the price of Y is $2. If he is buying 50 units of X he is spending $30 on Y, so since Y costs $2 each he is buying 15 units, thus A = 15.

Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved