Question 3.Consider Arturo, an individual with utility for a composite good (X) and indoor air quality (Q): U = XQ. Indoor air quality depends on pollution levels outside (P) and defensive expenditures (D): D = PQ2

. Let Arturo's income be Y.

3a)Arturo's problem of utility maximization subject to a budget constraint, mathematically. Draw Arturo's budget constraint and several

indifference curves.

3b) Using the setup of the optimization problem in part a), solve for the demand for the optimal qualityjQuery224017703710493436398_1614888101011(??, ??)and the obtained utility level??(??, ??). (Note that the price of X is 1 since X is a

numeraire good.)

3c) Suppose Y=10. What is the individual's WTA for an increase in pollution from P=1 to P=2?

3d) Suppose again Y=10. What is the individual's WTP for avoiding an increase in pollution from P=1 to P=2?