Question

Goods 1 and 2 are perfect complements and a consumer always consumes them in the ratio of three units of good 2 per unit of good 1. The price of good 1 is $1 while the price of good 2 is $4. The consumer has an income of $3,900. How many units of good 2 will be in the consumer's optimal bundle

Answer 1

Answer:

650 units

Explanation:

The consumer's bundle of goods includes 2 units of good 1 and 1 unit of good 2, for a total cost of $2 + $4 = $6.

If the consumer's budget is $3,900, then he/she will be able to purchase $3,900 / $6 = 650 bundles. That means that he/she will be able to purchase 650 units of good 2.