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(a) What is a budget line ? What does th...

(a) What is a budget line ? What does the point on it indicate in terms of prices?
(b) A consumer consumes x and y. Her money income is Rs.24 and the prices of x and y are Rs.4 and Rs.2 respectively. Answer the following questions:
(i) Can the consumer afford a bundle 4x and 5y?
(ii) What will be `MES_(xy)`, when the consumer is in equilibrium ? Explain.

Text Solution

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The correct Answer is:
(i)No, 26 > 24 (ii) 2 units
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