1. Rachel eats eggs and toast for breakfast and insists on having 3 pieces of toast for every two eggs she eats. a. Write down Rachel's utility function for eggs and toast. Derive her demand functions for eggs and toast. b. Predict what will happen to her consumption of eggs and toast if an income tax cut increases her income by 5%, ceteris paribus. Justify your prediction.

1. Rachel eats eggs and toast for breakfast and insists on having 3 pieces of toast for every two eggs she eats. a. Write down Rachel's utility function for eggs and toast. Derive her demand functions for eggs and toast. b. Predict what will happen to her consumption of eggs and toast if an income tax cut increases her income by 5%, ceteris paribus. Justify your prediction.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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