Question

Sue views hot dogs (H) and hot dog buns (B) as perfect complements in her consumption, and the corners of her indifference curves follow the 45-degree line: H-B. Suppose the price of hot dogs is $5 per package (8 hot dogs), the price of buns is $3 per package (8 hot dog buns), and Sue's budget is $48 per month. What is her optimal choice under this scenario?
A. 6 packages of hot dogs and 6 packages of buns.
B. 6 packages of hot dogs and 8 packages of buns.
C. 8 packages of hot dogs and 8 packages of buns.
D. 8 packages of hot dogs and 6 packages of buns.

Answer 1

Answer:

A

Explanation:

a budget constraint is the total amount of goods and services an individual can buy given the price of the products and the income of the consumer.

Sue is constrained by her income. Thus, she must spend within $48

The equation for this is :

$5H + $3B = $48

where  

H = hot dogs

B = Hot dog buns

(5 x 6 ) + (3 x 6 ) = $48