Fleur spends all of her income (M = $100) on two goods (x and y), and...

 

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Fleur spends all of her income (M = $100) on two goods (x and y), and her utility function is U = 3x + 2y. a. How do Fleur's indifference curves look like? Draw (a couple of) them and comment on her preferences for x and y (e.g., are they complements or substitutes). Calculate her MRSxy and briefly explain what that number means. b. If the prices of the two goods are px = $5 and py = $2, respectively, what is the optimal bundle of consumptions of x and y? c. The store that sells the two goods introduces a special deal. After one buys 4 units of good x with a normal price px = $5, the price of x reduces to px = $2.5 for all additional units purchased. Draw Fleur's new budget line under this deal. If Fleur utilizes the new deal, what is the optimal bundle of consumptions of x and y. Fleur spends all of her income (M = $100) on two goods (x and y), and her utility function is U = 3x + 2y. a. How do Fleur's indifference curves look like? Draw (a couple of) them and comment on her preferences for x and y (e.g., are they complements or substitutes). Calculate her MRSxy and briefly explain what that number means. b. If the prices of the two goods are px = $5 and py = $2, respectively, what is the optimal bundle of consumptions of x and y? c. The store that sells the two goods introduces a special deal. After one buys 4 units of good x with a normal price px = $5, the price of x reduces to px = $2.5 for all additional units purchased. Draw Fleur's new budget line under this deal. If Fleur utilizes the new deal, what is the optimal bundle of consumptions of x and y.