Robinson Crusoe lives alone on a deserted island. He can spend his time gathering coconuts or bananas. He has 16 hours available each day and can gather 4 coconuts in an hour or 8 bananas in an hour. Draw Robinson's budget constraint. Given that Robinson's Marginal Utility of bananas is always 25 and his Marginal utility of coconuts is always 100, what is his optimal consumption
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Answer:
Robinson crusoe lives alone on a deserted island. he can spend his time gathering coconuts or bananas. he has 16 hours available each day and can gather 4 coconuts in an hour or 8 bananas in an hour. draw robinson's budget constraint. given that robinson's marginal utility of bananas is always 25 and his marginal utility of coconuts is always 100, what is his optimal consumption? one day an individual from a neighbouring island arrives by boat and offers to exchange any number of fruits at a rate of 1 coconut for 1 banana. draw robinson's budget constraint at this exchange rate assuming he will now spend all his time gathering bananas. is robinson better off? what does he consume?
Answer:
Draw Robinson's budget constraint
Explanation:
In economics, a budget constraint represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income. Consumer theory uses the concepts of a budget constraint and a preference map as tools to examine the parameters of consumer choices .
For example, if Robinson spends eight hours working in the day, he gathers I unit of bananas or coconuts per every hour.
After that, the overall quantity of coconuts gathered in 1 day plus the quality of bananas produced in one day is eight.
The consumption is entirely based on the working hours of Robinson.
Explain the budget constraint.
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Robinson Crusoe lives alone on a deserted island.
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