Carol needs to decide how to spend her wealth on sh and chicken. For Carol, 1 lb of sh is equivalent to 2 lb of chicken. Her preference can be represented by the utility function u(x; y) = 2x + y where x is the quantity of sh (in lbs) and y is the quantity of chicken (in lbs). The consumption set is R2+. (a) Draw two typical indi erence curves for Carol, one corresponding to a utility level of u1 and one corresponding to a utility level u2, where 0 < u1 < u2. Make sure you label the slope of the indif- ference curves and the intercepts with the horizontal and vertical axes. (b) Suppose the price of sh is $1:5 per lb and and the price of chicken is $1 per lb. Carol has $20 to spend on sh and chicken. (i) Draw Carol's budget set, labeling the slope and the intercept points clearly. (ii) How much sh and chicken will Carol choose to purchase? I am looking for an answer to the points (c) and (d) below (c) Suppose now that the price of sh increases to $2 per pound. (i) Draw Carol's budget set, labeling the slope and the intercept points clearly. (ii) How much sh and chicken will Carol choose to purchase? (d) Suppose that Carol goes to a di erent supermarket where the price of sh is pX > 0 (in dollars per pound of sh) and the price of chicken is pY > 0 (in dollars per pound of chicken). (i) Find Carol's demand for sh as a function of the prices pX and pY . You can assume that she still has $20 to spend. (ii) Assume that the price of chicken is pY = 1. Draw Carol's demand function for sh as a function of the price of sh (pX) in a diagram with the quantity of sh on the vertical axis and the price of sh on the horizontal axis
Carol needs to decide how to spend her wealth on sh and chicken.
For Carol, 1 lb of sh is equivalent to 2 lb of chicken. Her preference
can be represented by the utility function
u(x; y) = 2x + y
where x is the quantity of sh (in lbs) and y is the quantity of chicken
(in lbs). The consumption set is R2+.
(a) Draw two typical indi erence
to a utility level of u1 and one corresponding to a utility level u2,
where 0 < u1 < u2. Make sure you label the slope of the indif-
ference curves and the intercepts with the horizontal and vertical
axes.
(b) Suppose the
is $1 per lb. Carol has $20 to spend on sh and chicken.
(i) Draw Carol's budget set, labeling the slope and the intercept
points clearly.
(ii) How much sh and chicken will Carol choose to purchase?
I am looking for an answer to the points (c) and (d) below
(c) Suppose now that the price of sh increases to $2 per pound.
(i) Draw Carol's budget set, labeling the slope and the intercept
points clearly.
(ii) How much sh and chicken will Carol choose to purchase?
(d) Suppose that Carol goes to a di erent supermarket where the price
of sh is pX > 0 (in dollars per pound of sh) and the price of
chicken is pY > 0 (in dollars per pound of chicken).
(i) Find Carol's demand for sh as a function of the prices pX and
pY . You can assume that she still has $20 to spend.
(ii) Assume that the price of chicken is pY = 1. Draw Carol's
demand function for sh as a function of the price of sh (pX)
in a diagram with the quantity of sh on the vertical axis and
the price of sh on the horizontal axis.
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