Question

Mr. Chan has an income of $250 that he is spending on donuts and cheese in such amounts that he derives 25 utils of satisfaction from the donuts and 25 utils of satisfaction from the cheese. From this information only, we:

Answer 1

cat say whether or not Chan is buying donuts and cheese in equilibrium amounts

Step-by-step explanation:

given that

the income is $250 that could be spend on donuts and cheese

Here the 25 utils denotes the donuts satisfaction and 25 units denotes the cheese satisfaction

So as we know that when the utility is maximum that means the equilibrium of the consumer could be attained

And,

Marginal Utility for Donuts ÷ dollar Price per unit for Donuts = Marginal Utility for Cheese ÷ dollar Price per unit for Cheese