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Elle is very fond of cashews. Her goal is to consume as many cashews as possible. Cashews come in small and large bags. There are

Elle is very fond of cashews. Her goal is to consume as many cashews as possible. Cashews come in small and large bags. There are 6 oz (qS ) in a small bag and 18 oz (q L)in a large.

a. Draw Elles budget line when her budget for cashews is $56 and the price of a large bag is (p L) is $7 and the price of a small bag (pS ) is $2. Measure q S on the horizontal axis and q L on the vertical.

b. How many small bags and how many large bags does Elle buy when m=56, p L =7, and pS =2?

c. Draw a picture of her indifference curve through her utility maximizing bundle.

d. Give an example of a utility function that we can use to describe Elles preferences

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a To draw Elles budget line you can use the formula for the budget constraint pSqS pLqL m where pS i... blur-text-image

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