Summary 10 Example 4.13 Figure E4.13 shows a budget line drawn along an indifference curve for a con sumer who is primarily interested in two goods, X and Y. If the price of Good X is $50/unit: (a) What is the consumer's income? (b) What is the price of Good Y? (c) What is the equation of the budget line? (d) Find the MRS at equilibrium. Good Y 60 40 50 v=200 B Good X 100 Figure E4.13 Budget and indifference curve Solution (a) The consumer's income (or budget) for these two goods must be 100 x 50-$5.000 because she can afford to buy 100 units @ $50/unit of Good X if she does not choose to buy any units of Good Y. (b) The price of Good Y per unit must be 5000/80 = $62.50 (c) The equation for the budget line: P.X+P,Y=Iwhere I = Income for the two goods 50X+62.5Y 5,000 (d) At equilibrium, MRS 50 = 0.8 P 62.5 SUMMARY Econo jose to allocate their scarce resources. Microeconom ne behavior of individual firms and applies it to bu nand, supply, elasticity, consumers' surplus, and lat