# Your budget line for goods A and B is represented below. Which of the following statements... Your budget line for goods A and B is represented below. Which of the following statements is or could be TRUE?
(a) If income is \$45, the price of Good A must always be \$5.
(b) The price of Good A increases after the consumer buys 2 units.
(c) When you have 5 units of Good A, you are able to buy an additional unit of Good A if you give up 1/3 units of Good B.
(d) When you have 5 units of good B, the marginal rate of transformation of A for B is 1/3 (???ab = 1/3)
(e) All of the above statements are false.

2 0 1 23 4 5 6 7 8 9 10 Good A

Ans. a) If income is \$45, the price of goods A must always be \$5

when income is \$45, the consumer can consume a maximum of 9 units of goods A

then, Qd = M/P, when income is \$45= \$45/9 = \$5

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