onvex Constrained Consumer Choice Andrew has a Friday night utility function UA(z,b) = z * b for pizza and beer. The price of pizza is Pz=$3 and the price of beer is Pb=$6. Andrew has $48 to spend and does not place any value on the money remaining in his wallet at the end of the night. a) Find Andrew’s optimal consumption bundle. b) Draw a graph of Andrew’s indifference curves and budget constraint (used together this is called the “consumer choice framework diagram”). c) Find and label a point “C” that is affordable but suboptimal.

ENGR.ECONOMIC ANALYSIS
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Convex Constrained Consumer Choice

Andrew has a Friday night utility function UA(z,b) = z * b for pizza and beer. The price of pizza is Pz=$3 and the price of beer is Pb=$6. Andrew has $48 to spend and does not place any value on the money remaining in his wallet at the end of the night.

a) Find Andrew’s optimal consumption bundle.

b) Draw a graph of Andrew’s indifference curves and budget constraint (used together this is called the “consumer choice framework diagram”).

c) Find and label a point “C” that is affordable but suboptimal.

d) Find and label a point “D” that is unaffordable and worse than the optimal point.

e) Find and label a point “E” that is better than the optimal point but not feasible.

f) Find the marginal rate of transformation.

g) Suppose we change our brewery laws and beer only costs $3 next week. What would Andrew’s optimal consumption bundle now be in this scenario?

 

PLEASE I NEED THE GRAPH 

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