Sammy always uses exactly 2 oz of cream for every 1 cup of coffee. She has $10 to spend. Coffee costs $1 per cup and cream costs $0.50 per oz.

a. Carefully draw Aliya’s budget constraint with coffee on the X-axis. You can use increments of 1 on the X-axis and 2 on the Y-axis. You do not need to show work.

b. Carefully draw and label any 3 accurate indifference curves. Label them U1, U2, and U3 where U3>U2>U1. You do not need to show work.

c. Label the following two combinations of coffee and cream on your graph: A: 5 coffee and 6 creams B: 3 coffee and 10 cream

d. Use your answer to part (c) to carefully explain whether bundle A or bundle B provides Aliya with more utility.

e. Algebraically determine Aliya’s utility-maximizing combination of coffee and cream. Be sure to show and explain all your steps and all your work.

f. Label Aliya’s utility-maximizing combination point “M” in the graph. Note: depending on your answer to part (b), you may need to draw an additional indifference curve

Answer rating: 100% (QA)

Here is the answer number Cream 20 18 16 14 12 to t 8 50 6 m 2 3 2 u m max coffee max cream 56 6 8 M ... View the full answer