Each day Paul, who is in third grade, eats lunch at school. He likes only Twinkies (t) and soda (s), andthese provide him a utility ofutility = U (t s) =square root (ts).a. If Twinkies cost $0.10 each and soda costs $0.25 per cup, how should Paul spend the $1 hismother gives him in order to maximize his utility?b. If the school tries to discourage Twinkie consumption by raising the price to $0.40, by howmuch will Paul’s mother have to increase his lunch allowance to provide him with the same levelof utility he received in part (a)?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Each day Paul, who is in third grade, eats lunch at school. He likes only Twinkies (t) and soda (s), and
these provide him a utility of
utility = U (t s) =square root (ts).

a. If Twinkies cost $0.10 each and soda costs $0.25 per cup, how should Paul spend the $1 his
mother gives him in order to maximize his utility?
b. If the school tries to discourage Twinkie consumption by raising the price to $0.40, by how
much will Paul’s mother have to increase his lunch allowance to provide him with the same level
of utility he received in part (a)?

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