Suppose that a household can purchase fruit for $3 per pound and vegetables for $2 per pound. If the household can contribute $12 a week toward the consumption of these goods which of the following points could be found on the budget line?Multiple choice question.0 pounds of fruit and 4 pounds of vegetables.0 pounds of fruit and 12 pounds of vegetables.4 pounds of fruit and 0 pounds of vegetables.3 pounds of fruit and 0 pounds of vegetables.
Question
Suppose that a household can purchase fruit for 2 per pound. If the household can contribute $12 a week toward the consumption of these goods which of the following points could be found on the budget line?Multiple choice question.0 pounds of fruit and 4 pounds of vegetables.0 pounds of fruit and 12 pounds of vegetables.4 pounds of fruit and 0 pounds of vegetables.3 pounds of fruit and 0 pounds of vegetables.
Solution
To solve this problem, we need to understand that the budget line represents all combinations of fruit and vegetables that the household can afford given their budget and the prices of the goods.
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0 pounds of fruit and 4 pounds of vegetables: This would cost the household 03 + 42 = 12, so this point could be on the budget line.
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0 pounds of fruit and 12 pounds of vegetables: This would cost the household 03 + 122 = 12, so this point could not be on the budget line.
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4 pounds of fruit and 0 pounds of vegetables: This would cost the household 43 + 02 = $12. This is exactly the budget, so this point could be on the budget line.
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3 pounds of fruit and 0 pounds of vegetables: This would cost the household 33 + 02 = 12, so this point could be on the budget line.
So, the points that could be found on the budget line are: 0 pounds of fruit and 4 pounds of vegetables, 4 pounds of fruit and 0 pounds of vegetables, and 3 pounds of fruit and 0 pounds of vegetables.
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