Margot the octopus has 5 right and 3 left legs. She is crazy about shoes and will only wear matching shoes on all her 8 legs. Her utility function is given by U(q1,92) = min[3q1,5q2], where q₁ is the number of right shoes, and q2 is the number of left shoes. Assume that Margot's income is I = $70, and the prices of the right and left shoes are p₁=$4 and p2=$5, respectively. a) Draw the budget line for Margot and several of her indifference curves. Put the right

Margot the octopus has 5 right and 3 left legs. She is crazy about shoes and will only wear matching shoes on all her 8 legs. Her utility function is given by U(q1,92) = min[3q1,5q2], where q₁ is the number of right shoes, and q2 is the number of left shoes. Assume that Margot's income is I = $70, and the prices of the right and left shoes are p₁=$4 and p2=$5, respectively. a) Draw the budget line for Margot and several of her indifference curves. Put the right

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Chapter1: Making Economics Decisions

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Problem 1. Octopuses understand Consumer Theory to0000000.
Margot the octopus has 5 right and 3 left legs. She is crazy about shoes and will only wear
matching shoes on all her 8 legs. Her utility function is given by U(91,92) = min[391,592],
where q₁ is the number of right shoes, and q2 is the number of left shoes. Assume that
Margot's income is I = $70, and the prices of the right and left shoes are p₁=$4 and p2=$5,
respectively.
a) Draw the budget line for Margot and several of her indifference curves. Put the right
shoes on the horizontal axis. Show the optimal bundle on the graph.
b) Calculate her optimal bundle - how many right and left shoes she will buy.

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