Question

Dan likes to spend his allowance on two things: candy and toys. Which of the following are the constraints that determine the possible consumption bundles of toys and candy available to Dan?

A) Demand and supply curves
B) Budget line and preferences
C) Substitution effect and income effect
D) Marginal utility and total utility

Answer 1

The constraints that determine the possible consumption bundles of toys and candy available to Dan are the budget line and preferences.

Step-by-step explanation:

The constraints that determine the possible consumption bundles of toys and candy available to Dan are the budget line and preferences.

The budget line represents the amount of money Dan has for both candy and toys. It shows the various combinations of candy and toys that are affordable given Dan's allowance.

Dan's preferences also play a role in determining his consumption bundles. He may have a preference for more candy or more toys, which will affect the combination of candy and toys he chooses to consume.