Writing The Budget constraint

Question

My answer

For state 1:

$$C1= (100*q_1+200*q_2)-150(q_1+q_2)$$

So $$C1= 50q_2-50q_1$$

For state 2:

$$C2= (200*q_1+100*q_2)-150(q_1+q_2)$$

So $$C2= 50q_1-50q_2$$

As a result, the state contingent budget constraint is

$$C1=-C2$$ or $$C1+C2=0$$

Please tell me your ideas anot my solution

Is this answer correct ?

Thank you for helps in advance.

Answer 1

The budget set is given by $$ \left\{q_1(100,200) +q_2(200,100)\;\Big |\;150 q_1+ 150q_2= 150\right\} $$ Substituting in the budget constraint $q_2= 1-q_1$ we get $$ (c_1,c_2) = (200−100 q_1,100 + 100q_1) $$ which is equivalent to $$ c_1+c_2= 300 $$