You are given the following total utilities of apples and mineral water obtained by Bervin. Given that each apple cost K5, each bottle of water cost K2, and Bervin’s income is K22, find the optimal combination of apples and bottles of mineral water.

Number of units consumed of a commodity	TUapples (Utils)	TUapples (Utils)
1	30	20
2	55	38
3	75	54
4	90	68
5	100	80
6	105	90
7	106	98

b. With the aid of a clearly labelled diagram(s), explain the assumptions underlying the indifference analysis.

c. Martha, a former actress, spends all her income on plays and movies and likes plays exactly three times as much as she likes movies. 

i. Draw her indifference map. 

ii. Martha earns K120/week. If play tickets cost K12 each and movie tickets cost K4 each, show her budget line and highest attainable indifference curve. How many plays will she see?

iii. If play tickets are K12 movie tickets K5, how many plays will she attend?

Answer rating: 100% (QA)

a By looking at the table there can be two possibilites 1 K5 4 units K2 1 units 22 90 utils 20 utils ... View the full answer