Question: Chris snacks on cashews (x) and macadamia nuts (y) when he watches TV. His preferences can be represented by the utility function U(x,y) = 2ln

Chris snacks on cashews (x) and macadamia nuts (y) when he watches TV. His preferences can be represented by the utility function U(x,y) = 2ln x + 4ln y where x represents the number of pounds of cashews and y represents the number of pounds of macadamia nuts.

a) Given his preferences find his demand functions for cashews (x) and macadamia nuts (y).

b) Suppose that the price of a pound of cashews is $5 and that Chris has $45 to spend on cashews and macadamia nuts. Find Chris's demand curve for macadamia nuts. Illustrate his demand curve in a diagram.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!