# A person's budget set for 2 goods (X and Y) is 700 greater than or equal to 5X + 2Y. How does...

## Question:

A person's budget set for 2 goods (X and Y) is {eq}700 \geq 5X + 2Y {/eq}.

How does the budget set to change if prices for both double goods double and consumer income also doubles?

## Budget Set:

The budget set defines all those bundles of goods that consumer can buy at the given income and prices of the goods. Those bundles which fall below the budget line can be purchased using less than the entire income of the consumer. Those bundles which fall on the budget line can be purchased using the entire income of the consumer.

## Answer and Explanation: 1

The budget constraint of the consumer is: {eq}5X + 2Y \le 700 {/eq}

When the income and prices of the goods double, the budget constraint becomes:

{eq}\begin{align*} 10X + 4Y &\le 1400\\ \Rightarrow 5X + 2Y &\le 700 \end{align*} {/eq}

The budget set of the consumer won't change as the budget constraint hasn't changed.

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Chapter 1 / Lesson 6Learn what budget constraint is and view examples. Understand how to use the budget constraint formula and how to represent a budget constraint using a graph.

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