Question

Jamal views hamburgers and hamburger buns as perfect complements in his consumption, and the corners of his indifference curves follow the 45-degree line. Suppose the price of hamburgers is $10 per package (6 hamburgers ), the price of buns is $3 per package (8 hamburger buns), and Jamal's budget is $50 per month. What is his optimal choice under this scenario?    

	A.	4 packages of hamburgers and 3 packages of buns
	B.	3 packages of hamburgers and 4 packages of buns
	C.	3 packages of hamburgers and 3 packages of buns
	D.	2 packages of hamburgers and 6 packages of buns

Answer 1

Answer- Correct option is 'A'

Budget = $ 50

The price of hamburgers = $ 10

The price of buns = $3

4 packages of hamburgers and 3 packages of buns is his optimal choice under this scenario.

                            = 4 * 10 + 3 * 3

                            = 40 + 9

                            = 49

Optimal choice is a best combination of a goods and services purchased by a consumer that provides a highest level utility possible. The budget set comprises of all bundles that are obtained to the consumer. The consumer can pick his or her utilisation bundle from the set of budget. The optimal combination is the best combination of utilisation of goods and services to the consumer.