Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2 if she spends her entire income. The prices of the two goods are Rs 6 and Rs 8 respectively. How much is the consumer’s income?

Budget line – P1X + P2Y = M


Where,


P1 – Price of Good 1 = 6


P2 – Price of Good 1 = 8


M – Income of consumer = ?


X – Units of Good 1 = 6


Y - Units of Good 2 = 8


M = (6 × 6) + (8 × 8) = 36 + 64 = 100


Therefore, the income of consumer is Rs 100


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