John has utility function U = C0.4H0.4for good C and housing H (housing measured in square feet). John's preferences are such that he always prefers more housing H (i.e., the larger the home or apartment in square-feet, H, the better); other than the size of the housing, all homes are identical quality, etc. (only differ in size).

John has income Y = $6,000.Market prices are PC= $1 per unit and PH= $3 per unit (square foot). Marginal utilities for C and H are:

MUC= 0.4C^-0.6H^0.4and MUH= 0.4C^0.4H^-0.6

c.Assume John still spends his entire income on C and H.Would John prefer to live in the free government house (H = 600) or would he choose to live in another home size H like you found in part a) and pay for it himself? Compare the utility levels in each case and illustrate graphically.