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3. Andy purchases only two goods, apples (a) and kumquats (k). He has an income of $40 and can buy apples at $2 per pound and kumquats at $4 per pound. His utility function is U(a,k) = 5a + 3k. %3D a. Draw Andy's budget line with apples on the x-axis and kumquats on the y-axis. b. What is his marginal utility for apples and his marginal utility for kumquats? What is his MRS? c. Draw some of Andy's indifference curves (you don't need to put bundles or utility numbers on the indifference curves, just be careful with the slope). What bundle of apples and kumquats will Andy purchase to maximize his utility? Show the optimal bundle on your diagram. d. Find Andy's demand function for apples for general I, Pa and Pk.

3. Andy purchases only two goods, apples (a) and kumquats (k). He has an income of $40 and can buy apples at $2 per pound and kumquats at $4 per pound. His utility function is U(a,k) = 5a + 3k. %3D a. Draw Andy's budget line with apples on the x-axis and kumquats on the y-axis. b. What is his marginal utility for apples and his marginal utility for kumquats? What is his MRS? c. Draw some of Andy's indifference curves (you don't need to put bundles or utility numbers on the indifference curves, just be careful with the slope). What bundle of apples and kumquats will Andy purchase to maximize his utility? Show the optimal bundle on your diagram. d. Find Andy's demand function for apples for general I, Pa and Pk.

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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3. Andy purchases only two goods, apples (a) and kumquats (k). He has an income of $40 and can buy apples at $2 per pound and kumquats at $4 per pound. His utility function is U(a,k) = 5a + 3k. %3D a. Draw Andy's budget line with apples on the x-axis and kumquats on the y-axis. b. What is his marginal utility for apples and his marginal utility for kumquats? What is his MRS? c. Draw some of Andy's indifference curves (you don't need to put bundles or utility numbers on the indifference curves, just be careful with the slope). What bundle of apples and kumquats will Andy purchase to maximize his utility? Show the optimal bundle on your diagram. d. Find Andy's demand function for apples for general I, Pa and Pk.
Transcribed Image Text:3. Andy purchases only two goods, apples (a) and kumquats (k). He has an income of $40 and can buy apples at $2 per pound and kumquats at $4 per pound. His utility function is U(a,k) = 5a + 3k. %3D a. Draw Andy's budget line with apples on the x-axis and kumquats on the y-axis. b. What is his marginal utility for apples and his marginal utility for kumquats? What is his MRS? c. Draw some of Andy's indifference curves (you don't need to put bundles or utility numbers on the indifference curves, just be careful with the slope). What bundle of apples and kumquats will Andy purchase to maximize his utility? Show the optimal bundle on your diagram. d. Find Andy's demand function for apples for general I, Pa and Pk.
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