Question: Consider an individual with utility function u ( x , y ) = ( x + 3 ) y , and income I = $

Consider an individual with utility function u(x,y)=(x+3)y, and income I= $30.
The price of good x is px=$2, while the price of good y is py=$1. a. Find the optimal consumption bundle of this individual. Evaluate his utility function at
this optimal bundle.
b. Assume now that his income was increased by $10 for a total I= $40. What is his new
optimal consumption bundle? What is the new utility level he can reach?
c. Assume now that the price of good x decreases by $1 so that px= $1. What is his new
optimal consumption bundle? What is the new utility level he can reach?
d. Assume that he receives a coupon allowing him to consume 4 units of good x for free.
What is his new optimal consumption bundle? What is the new utility level he can reach?
e. In which version of Parts b-d is the consumer better off? That is, describe whether the
consumer prefers the change in income from Part b, the change in price from Part c, or
the coupon from Part d

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