5. Casper consumes cocoa and cheese. Cocoa is sold in an unusual way. There is only one supplier, the more cocoa you buy from him, the higher the price you have to pay per unit. In fact y units of cocoa will cost Casper y2 dollars. Cheese is sold in the usual way at a price of 2 dollars per unit. Casper's income is 20 dollars and his utility function is U(x, y)=x+2y, where x is his consumption of cheese and y is his consumption of cocoa. a. Sketch Casper's budget set and shade it in. b Sketch some of his indifference curves and label the point that he chooses. c. Calculate the amount of cheese and the amount of cocoa that Casper demands at these prices and this income.

5. Casper consumes cocoa and cheese. Cocoa is sold in an unusual way. There is only one supplier, the more cocoa you buy from him, the higher the price you have to pay per unit. In fact y units of cocoa will cost Casper y2 dollars. Cheese is sold in the usual way at a price of 2 dollars per unit. Casper's income is 20 dollars and his utility function is U(x, y)=x+2y, where x is his consumption of cheese and y is his consumption of cocoa. a. Sketch Casper's budget set and shade it in. b Sketch some of his indifference curves and label the point that he chooses. c. Calculate the amount of cheese and the amount of cocoa that Casper demands at these prices and this income.

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

Please provide full derivation, and
5. Casper consumes cocoa and cheese. Cocoa is sold in an unusual way. There is only one supplier, and
the more cocoa you buy from him, the higher the price you have to pay per unit. In fact y units of cocoa
will cost Casper y2 dollars. Cheese is sold in the usual way at a price of 2 dollars per unit. Casper's
income is 20 dollars and his utility function is U(x, y)=x+2y, where x is his consumption of cheese
and y is his consumption of cocoa.
a. Sketch Casper's budget set and shade it in.
b Sketch some of his indifference curves and label the point that he chooses.
c. Calculate the amount of cheese and the amount of cocoa that Casper demands at these prices and this
income.

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Step 1: Define budget set

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Step 3: Graph Indifference curves

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Step 4: Find Optimal consumption bundle

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