3. Consumer and Producer Theory
Budget Constraints — Quiz
Test your understanding of budget constraints with 5 practice questions.
Practice Questions
Question 1
If a consumer's income is $I = \$100$, the price of good X is $P_X = \$20$, and the price of good Y is $P_Y = \$10. If the consumer buys 3 units of good X, how many units of good Y can they buy with their remaining income?
Question 2
What does a budget line illustrate?
Question 3
If the price of good X increases, while income and the price of good Y remain constant, what happens to the budget line?
Question 4
Which of the following scenarios would cause a budget line to shift inward, parallel to the original budget line?
Question 5
A consumer has an income of $I = \$50$. The price of good A is $P_A = \$5$ and the price of good B is $P_B = \$10. What is the maximum quantity of good B the consumer can buy if they spend all their income on good B?