Nikki loves to collect accessories, namely boots (good x) and hats (good y). Her preferences over...

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Nikki loves to collect accessories, namely boots (good x) and hats (good y). Her preferences over bundles (r, y) containing boots and hats can be represented by u(x, y) = a"y-", where 1 > a > 0. The price of a hat is $25; the price of a pair of boots is $75, and Nikki's income is $375. Nikki also has limited closet space: she has 10 units of space in her closet, and hats and pairs of boots cach take up 1 unit of space. (a) Write down Nikki's space constraint and her money constraint. (b) If Nikki chooses the bundle (4, 3), it must be that a =, (c) If Nikki chooses the bundle (1, 9), it must be that a = (d) Suppose Nikki has decided that given her preferences and the constraints she faces, the optimal bundle for her is (1, 9). Before making the purchase, however, Nikki discovers that her roommate has stolen some money from her. She can still afford (1, 9) despite the theft, but would this still be her chosen bundle? Explain in no more than 2 sentences. Nikki loves to collect accessories, namely boots (good x) and hats (good y). Her preferences over bundles (r, y) containing boots and hats can be represented by u(x, y) = a"y-", where 1 > a > 0. The price of a hat is $25; the price of a pair of boots is $75, and Nikki's income is $375. Nikki also has limited closet space: she has 10 units of space in her closet, and hats and pairs of boots cach take up 1 unit of space. (a) Write down Nikki's space constraint and her money constraint. (b) If Nikki chooses the bundle (4, 3), it must be that a =, (c) If Nikki chooses the bundle (1, 9), it must be that a = (d) Suppose Nikki has decided that given her preferences and the constraints she faces, the optimal bundle for her is (1, 9). Before making the purchase, however, Nikki discovers that her roommate has stolen some money from her. She can still afford (1, 9) despite the theft, but would this still be her chosen bundle? Explain in no more than 2 sentences.

Answer rating: 100% (QA)

A The constraint regarding the closet is x y or 10 The constraint regarding money budge... View the full answer