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2. Bobby, the brain, Heena His utility function is U = FC. The consumes fifty units of each. a. Draw a graph showing hi b. Assume that his income $150 in money income o Justify your answer. Prov c. Now suppose he gets a f and a food stamp of $30 stamps? Graph your ans

2. Bobby, the brain, Heena His utility function is U = FC. The consumes fifty units of each. a. Draw a graph showing hi b. Assume that his income $150 in money income o Justify your answer. Prov c. Now suppose he gets a f and a food stamp of $30 stamps? Graph your ans

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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2. Bobby, the brain, Heenan has income of $100. He consumes food (F) and clothes (C). His utility function is U = FC. The price of food and clothes is one dollar per unit. He initially consumes fifty units of each. a. Draw a graph showing his equilibrium. b. Assume that his income is $100. He receives a food stamp worth $50. Would he prefer $150 in money income or $100 in income and a $50 food stamp? Are they the same? Justify your answer. Provide a graph. c. Now suppose he gets a food stamp of $300. Is he indifferent between an income $100 and a food stamp of $300 as compared to a money income of $400 without food stamps? Graph your answer.
Transcribed Image Text:2. Bobby, the brain, Heenan has income of $100. He consumes food (F) and clothes (C). His utility function is U = FC. The price of food and clothes is one dollar per unit. He initially consumes fifty units of each. a. Draw a graph showing his equilibrium. b. Assume that his income is $100. He receives a food stamp worth $50. Would he prefer $150 in money income or $100 in income and a $50 food stamp? Are they the same? Justify your answer. Provide a graph. c. Now suppose he gets a food stamp of $300. Is he indifferent between an income $100 and a food stamp of $300 as compared to a money income of $400 without food stamps? Graph your answer.
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