1. For this exercise you'll be drawing a graph where we represent amounts of cookies purchased on the horizontal axis and amounts of coffee purchased on the vertical-axis. Ben's indifference curves all have a constant slope of -2. Draw a set of Ben's indifference curves and draw Ben's budget constraint if cookies cost $2 and coffee costs $4 and Ben has $12 available to spend. 2. What does Ben optimally purchase? Explain. 3. Suppose Ben is currently consuming 3 coffees and no cookies. At this point, Ben's marginal utility of cookies is 2 and Ben's marginal utility of coffee is 1. Using the prices from above: cookies cost $2 and coffee costs $4, how would you advise Ben to adjust his consumption if Ben wishes to optimize? Explain.

1. For this exercise you'll be drawing a graph where we represent amounts of cookies purchased on the horizontal axis and amounts of coffee purchased on the vertical-axis. Ben's indifference curves all have a constant slope of -2. Draw a set of Ben's indifference curves and draw Ben's budget constraint if cookies cost $2 and coffee costs $4 and Ben has $12 available to spend. 2. What does Ben optimally purchase? Explain. 3. Suppose Ben is currently consuming 3 coffees and no cookies. At this point, Ben's marginal utility of cookies is 2 and Ben's marginal utility of coffee is 1. Using the prices from above: cookies cost $2 and coffee costs $4, how would you advise Ben to adjust his consumption if Ben wishes to optimize? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

can someone please draw the graphs for this problem please and explain how to solve it.

1. For this exercise you'll be drawing a graph where we
represent amounts of cookies purchased on the horizontal axis
and amounts of coffee purchased on the vertical-axis. Ben's
indifference curves all have a constant slope of -2. Draw a set of
Ben's indifference curves and draw Ben's budget constraint if
cookies cost $2 and coffee costs $4 and Ben has $12 available
to spend.
2. What does Ben optimally purchase? Explain.
3. Suppose Ben is currently consuming 3 coffees and no
cookies. At this point, Ben's marginal utility of cookies is 2 and
Ben's marginal utility of coffee is 1. Using the prices from
above: cookies cost $2 and coffee costs $4, how would you
advise Ben to adjust his consumption if Ben wishes to optimize?
Explain.

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Step 1: Define utility function and budget constraint:

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Step 3: Calculate optimal purchase:

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Step 4: Explain adjustment:

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