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1. Alice has a monthly lunch budget of 360 dollars which she spends on either burgers (B) or pizza (Z). The price of each pizza is 16 dollars and the price of each burger is 8 dollars. Alice's utility is given by: U (B, Z) = B'/2 +4Z\/2 (a) Find Alice's budget constraint. (b) Set up the Lagrangian and find her optimal consumption. (c) What is her new consumption if the price of burgers becomes 16 dollars?

1. Alice has a monthly lunch budget of 360 dollars which she spends on either burgers (B) or pizza (Z). The price of each pizza is 16 dollars and the price of each burger is 8 dollars. Alice's utility is given by: U (B, Z) = B'/2 +4Z\/2 (a) Find Alice's budget constraint. (b) Set up the Lagrangian and find her optimal consumption. (c) What is her new consumption if the price of burgers becomes 16 dollars?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Can you help me with 1b and 1c please?

1. Alice has a monthly lunch budget of 360 dollars which she spends on either burgers (B) or pizza (Z). The price of each pizza is 16 dollars and the price of each burger is 8 dollars. Alice's utility is given by: U (B, Z) = B'/2 + 4Z\/2 (a) Find Alice's budget constraint. (b) Set up the Lagrangian and find her optimal consumption. (c) What is her new consumption if the price of burgers becomes 16 dollars?
Transcribed Image Text:1. Alice has a monthly lunch budget of 360 dollars which she spends on either burgers (B) or pizza (Z). The price of each pizza is 16 dollars and the price of each burger is 8 dollars. Alice's utility is given by: U (B, Z) = B'/2 + 4Z\/2 (a) Find Alice's budget constraint. (b) Set up the Lagrangian and find her optimal consumption. (c) What is her new consumption if the price of burgers becomes 16 dollars?
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