Question

Joe's income is $500, the price of food (F, y-axis) is $2 per unit, and the price of shelter (S, x-axis)is $100. Which of the following represents his budget constraint?

A. 500 = 2F + 100S
B. F = 250 - 50S
C. S = 5 - .02F
D. All of the above.

Answer 1

Answer:

D. All of the above.

Explanation:

We can model his budget constraint by the following first order function.

2F + 100S = 500

In which F is the number of food items that he buys and S is the number of shelters that he pays.

So A. is correct.

If we want to write this equation with F as a function of S, it is also possible:

2F + 100S = 500

2F = 500 - 100S

F = 250 - 50s

So B. is also correct

Writing with S as function of F

2F + 100S = 500

100S = 500 - 2F

S = 5 - 0.02F

So C. is also correct

The correct answer is:

D. All of the above.