Question: [ 2 5 points ] Chuck, who thinks he has a condition in which he is extremely sensitive to light and electromagnetic currents, believes that
points Chuck, who thinks he has a condition in which he is extremely sensitive to light and
electromagnetic currents, believes that his condition will be eased by drinking smoothies made up of Fuji
apples and berries, mixed in just the right proportions. Suppose that he has M $ to spend on apples
and berries and their prices are PA $ per pound and PB $ per pound, and that his utility function is
UA B minAB
where A is pounds of apples and B is pounds of berries. The real function FX Y minX Y outputs the
smaller of X and Y or specifically minX Y X if X Y and minX Y Y if X Y Thus, the above
utility function compares A and B and outputs the smaller of the two.
a Neatly plot an indifference curve through A B
b Draw the budget line.
c Write out the two equations that characterize the solution to Chucks utility maximization problem. One
equation is the budget line. The other equation characterizes the proportions of apples and berries that
Chuck prefers, or geometrically the corners of all of the Lshaped indifference curves.
d Give Chucks optimal consumption bundle A B
e Show A B on your graph along with the indifference curve through A B
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