Question: Need help with this one question please 7. (20 points) Your utility function for Wine and cheese is U (x, y) = x where x

Need help with this one question please

Need help with this one question please 7. (20 points) Your utility

7. (20 points) Your utility function for Wine and cheese is U (x, y) = x where x is your consumption of wine (in ml) and y is your consumption of cheese (in ounce). a) Your income is $900, and you consume 100 ml of Wine and 100 ounces of cheese. What are the market prices of wine px (per ml) and cheese py (per ounce)? Explain your answer carefully. b) Draw a graph to illustrate your optimal choice. c) Suppose your income doubles to $1800, and the market prices are the same as What you have calculated in a). What are your new optimal consumption levels of x and y? Draw a graph to illustrate the effect of this income change

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!