Vasco likes spare ribs, q1, and fried chicken, q2. His utility function is U = 10q12q2. His
Question:
a. If he pays $10 for a slab of ribs and $5 for a chicken, what is his optimal consumption bundle? Show his budget line, indifference curve, and optimal bundle, e1, in a diagram.
b. Suppose the price of chicken doubles to $10. How does his optimal consumption of chicken and ribs change? Show his new budget line and optimal bundle, e2, in your diagram.
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Related Book For
Microeconomics Theory and Applications with Calculus
ISBN: 978-0133019933
3rd edition
Authors: Jeffrey M. Perloff
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