For Mitzi, shampoo and conditioner are perfect complements. She likes to use 1 squirt of shampoo and 1 squirt of conditioner each time she washes her hair.
a. Draw a set of indifference curves for Mitzi that illustrate the utility she derives from using shampoo and conditioner.
b. Assume that shampoo costs $4 and conditioner costs $2. Construct a budget constraint for Mitzi and describe her purchasing habits. What is her optimal bundle likely to look like?
c. Suppose that prices change so that shampoo costs $2 and conditioner costs $4. What is likely to happen to Mitzi's optimal bundle as a result? Explain.
d. How would your answer to (c) change if Mitzi used 2 squirts of shampoo and 1 squirt of conditioner each time she washed her hair?