budget line equation

Shoppingal

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Sep 28, 2011
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Geirge's income is $100 a week, CD is $10 each and price if a book is $20. DO NOT ASSUME U =XY

how do I write an equation for this?
 
I think this is it

the budget constraint would be

P_x (x)+P_y(y)=I
10c+20b=100

now see what value you would get if you spent all of your income on books. 100/20=5 this is your x intercept

now how many units of cds could you buy if you spent all of your income on Cds? 100/10=10 thats your y intercept.

the slope is rise over run. so 10/5=2

P_x (x)+P_y(y)=I take the budget constraint
y= I/P_y - (P_x)/(P_y) (x) solve for y

I/p_y we found to be 10.
(P_x)/(P_y) <- slope = 2

so the equation for the budget line would be

y= 10-2x


hope that helps
 
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