Problem 3Teddy thinks 1 pancake and 2 spoons of syrup are perfect complements. Letpancake be commodity 1 and syrup be commodity 2. The price of pancake is $1 perunit and the price of syrup is $0.50 per unit. Teddy has $10 to spend on a breakfast ofpancake and syrup.Task 1: Find the optimal bundle for Teddy.Task 2: Illustrate the optimal bundle in the commodity space. (Include the budgetline and the indifference curve going through the optimal bundle.)Task 3: Suppose Mary has the same preference as Teddy and faces the sameprices, but is richer with $25 to spend. What is the aggregate demand for pancake ina world of only Mary and Teddy?

The objective of this question is to determine the optimal bundle of pancakes and syrup for Teddy…

Answered: Problem 3 Teddy thinks 1 pancake and 2…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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