Emi's friend Xindi also likes tacos, but she doesn't like sandwiches. Instead, she always consumes exactly two tacos (good x) with one glass of horchata (y), and she doesn't enjoy either good without the other. Suppose prices are the same as initially in problem 1, so that horchata is twice as expensive as tacos (Px=$2, Py=$4), and Xindi has the same budget as Emi: I=$24 a) Propose a utility function that is consistent with these preferences and draw a couple of its isoquants. b) Solve Xindi's long run utility maximization to find the basket of goods she will purchase. c) What if, just as in problem 1, the good on the x axis goes on sale for $1/ unit?

Emi's friend Xindi also likes tacos, but she doesn't like sandwiches. Instead, she always consumes exactly two tacos (good x) with one glass of horchata (y), and she doesn't enjoy either good without the other. Suppose prices are the same as initially in problem 1, so that horchata is twice as expensive as tacos (Px=$2, Py=$4), and Xindi has the same budget as Emi: I=$24 a) Propose a utility function that is consistent with these preferences and draw a couple of its isoquants. b) Solve Xindi's long run utility maximization to find the basket of goods she will purchase. c) What if, just as in problem 1, the good on the x axis goes on sale for $1/ unit?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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