In a one-period economy, the expression for the budget constraint is
A) $C = w ( N s + l ) + \pi - T$.
B) $C = w ( N s + l ) + \pi + T$.
C) $C = w ( h + l ) + \pi - T$.
D) $C = w N s + \pi - T$.
E) $C = w l = w h + \pi - T$.

Question

Quizplus · Accepted Answer

In a one-period economy, an individual can only consume what they earn in that period, so their budget is limited to their total income. From the given options, only choice D, $C = w N s + \pi - T$, represents this concept. Here, $w N s$ is the individual's total earnings from labor and $\pi - T$ is their earnings from any other sources net of taxes. Therefore, choice D is the best choice for the budget constraint in a one-period economy.

In a One-Period Economy, the Expression for the Budget Constraint C=w(Ns+l)+π−TC = w ( N s + l ) + \pi - TC=w(Ns+l)+π−T

In a One-Period Economy, the Expression for the Budget Constraint $C = w ( N s + l ) + \pi - T$