Connie has a monthly income of $8000 that she allocates among two goods; meat and potatoes. Suppose meat costs $10 per pound and potatoes $4 per pound. a) Suppose also that her utility function is given by the equation u(M, P) = 8M + 2P. Draw her budget constraint and her indifference curves. What combination of meat and potatoes should she buy to maximize her utility? Show this combination on the graph. b) Now suppose that Connie’s preferences are such that she consumes exactly two pounds of meat for five pounds of potatoes. Draw her budget constraint and her indifference curves. What combination of meat and potatoes should she buy to maximize her utility? Show this combination on the graph.
Connie has a monthly income of $8000 that she allocates among two goods; meat and potatoes. Suppose meat costs $10 per pound and potatoes $4 per pound.
a) Suppose also that her utility function is given by the equation u(M, P) = 8M + 2P. Draw her budget constraint and her indifference
b) Now suppose that Connie’s preferences are such that she consumes exactly two pounds of meat for five pounds of potatoes. Draw her budget constraint and her indifference curves. What combination of meat and potatoes should she buy to maximize her utility? Show this combination on the graph.
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