Question: You can solve graphically or using equations. Marta has a monthly income of $600. Marta can only buy two goods: Health Care (X1) and Other

You can solve graphically or using equations.

Marta has a monthly income of $600. Marta can only buy two goods: Health Care (X1) and Other goods (X2).  

Marta's Utility Function = X1 * 3X2

How much should Marta spend on health care? How much should Marta spend on other goods?

  1. Show Marta's budget constraint on a graph
  2. Show 3 utility functions on the same graph: $400, $600 and $800
  3. What is Marta's Utility at each of these utility functions?
  4. How much does Marta spend on health care? How much does she spend on other goods at her income of $600?

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