An Agent Consumes Goods X and Y, with Prices P_x

question 29

Multiple Choice

An agent consumes goods x and y, with prices P_x = $5 per unit and P_y = $8 per unit. The consumer's income is I = $48. The government imposes a tax of $1 per unit on good x. What is the new equation for the budget constraint?

• A) y = 6 - (5/8)x
• B) y = 6 - .75x
• C) y = 8 - (6/8)x
• D) y = 48 - 8x

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Definitions:

Budgeting

The process of creating a plan to spend money, outlining an organization's financial and operational goals.

Flexible Budget

A budget that molds itself to fit changes in the volume or intensity of activity.

Other Expenses

Costs not directly related to the production or selling of goods and services, such as interest expenses and loss from foreign exchange.

Containers Refurbished

Used containers that have been restored to good condition and functionality for reuse.