Southland Company is preparing a cash budget for August. The company has $17,000 cash at the beginning of August and anticipates
1 answer:
You might be interested in
Answer:
3 salads, 6 vegetarian burgers
Explanation:
Data provided in the question:
Weekly food budget = $36
Cost of salad, Cs = $6
Cost of vegetable burger, Cv = $3
Now,
Let the number of salads be 'S'
and, the number of vegetable burgers be 'V'
thus,
S × Cs + V × Cv = $36
or
S × $6 + V × $3 = $36 ............(1)
also,
2 salads and 4 vegetarian burgers will give her a utility of 8
i.e U(2, 4 ) = 8
or
U( S, V ) = SV
Now,
From optimal marginal utility condition
Marginal rate of substitution =
or
or
V = 2S ..........(2)
substituting the above value in 1
S × $6 + 2S × $3 = $36
or
6S + 6S = 36
or
12S = 36
or
S = 3
substituting S in (2)
V = 2(3)
or
V = 6
Hence,
3 salads, 6 vegetarian burgers