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Daniel derives utility from only two goods, cake (Qc) and donuts (Qd). The marginal utility that Daniel receives from cake (MUc) and donuts (MUd) are given as follows: MUc = Qd MUd = Qc Daniel has an income of $240 and the price of cake (Pc) and donuts (Pd) are both $3. What is Daniel's budget constraint?

Respuesta :

Answer:

240= 3Qc + 3Qd  

Explanation:

The computation of the Daniel's budget constraint is shown below;

Given that

Daniel's income= $240

Price of cake (Pc) =$3

Price of donuts (Pd) =$3

So spending on cake = 3Qc

And,

Spending on donut= 3Qd

Finally

Total spending = 3Qc + 3Qd

Now the equation of budget constraint is

Income= (quantity of cake)(price of cake) + ( quantity of donut)(price of donut)

So,  

Income= Qc Pc+ Qd Pd

240= 3Qc + 3Qd  

The Daniel's budget constraint is shown below;

Given Information :

  • Daniel's income= $240
  • Price of cake (Pc) =$3
  • Price of donuts (Pd) =$3
  • Spending on cake = 3Qc
  • Spending on donut= 3Qd

Total spending = 3Qc + 3Qd

Now, the equation of budget constraint is

  • Income= (quantity of cake)(price of cake) + ( quantity of donut)(price of donut)  
  • Income= Qc Pc+ Qd Pd  
  • 240= 3Qc + 3Qd  

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