Question: A child budget is 3 dollars and she has two options: 1)ice cream 2) cake. Her utility function is u(x,y)=yx 2 . The first five

A child budget is 3 dollars and she has two options:

1)ice cream

2) cake.

Her utility function is u(x,y)=yx². The first five ice cream cones are free but each additional cone will cost 1$. Cakes are 1$ at any amount.

1) Find an optimal bundle. What will happen with optimal bundle if she has $2 budget.

2) Find and draw budget set. What will happen with budget set if the child has 2$ budget but now she has 3 free cakes in additional to ice cream cones.

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