If income is 750 what was the initial price of good x what...

If income is $750, what was the initial price of good X What is the price of good W if the initial income is $750? What is the price of good X on the new budget constraint I2? What is the price of good W in the new budget constraint I2?

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00:01 Okay, let's say we have a consumer whose income is $500 and the price of good x is $5 and the price of good z is $10.

00:09 And we want to calculate the budget constraint, which just represents all the combinations of goods x and z that the consumer can afford with their given income and with the price of the goods.

00:20 So the general form for the budget constraint is income equals the price of x times the quantity of x plus the price of z times the quantity of z.

00:30 So if we had to write this out, it would be 500, because the consumer's income is 500, equals 5x plus 10z, with x equaling the number of the quantity of good x and z equaling the quantity of good z.

00:49 So this would be the equation.

00:50 This would be our answer, and this is a z.

00:54 Now let's draw the budget constraint.

00:55 So we have this information, so we need to figure out what it would look like on a graph.

01:00 And so to do that, we would just kind of set one of the variables to zero to solve for the other.

01:05 So if we want to solve for x, we're going to set z to zero.

01:08 So it would be 500 equals 5x plus 10 times zero.

01:14 So 500 equals 5x.

01:17 X equals 100.

01:18 Then we do the same thing for z.

01:20 So 500 equals 5 times 0 plus 10z.

01:27 500 equals 10z...