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

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
Get step-by-step solutions from verified subject matter experts
