1. : Suppose Max's preferences for gin (g) and tonic (t) can be represented by the utility function (, ) = (2, ).
2. Draw Max's indifference curves corresponding to U = 2, U = 3, and U = 4 respectively. Do Max's preferences satisfy monotonicity?
3. Use Max's consumer choice problem to derive Max's demand function for gin as a function of the prices and income pg, pt and M: = ( , , ). The utility function is not a differentiable function so you can't use calculus and the standard method to solve Max's consumer's choice problem. Hint: Look at Max's indifference curves in in the previous question to see which bundles he might choose at different relative prices.
4. Draw Max's demand curve for gin g when he has income 12 and the price of tonicpt is2:=(| =2,=12). (4)