Question: John's utility function is given by the following equation (, ) = min(3, 4) where x is the unit of good X consumed, and y

John's utility function is given by the following equation

(, ) = min(3, 4)

where x is the unit of good X consumed, and y is the unit of good Y consumed. John's budget is $240, price of good X (x) is $5, and price of good Y( y)is $6. Show all the steps, with definition of every new notation used in the steps.

a)What is John's optimal consumption(* , * )? Graph the optimal consumption along with appropriate budget line and indifference curve.

b)IfXincreases from $5 to $8, what is the new optimal consumption(F , F )? Graph the new optimal consumption along with appropriate budget line and indifference curve on part a's graph.

c) IfXincreases from $5 to $8 what is the substitution effect and income effect in terms of good X?

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