sider two goods that are perfect substitutes such that four (4) units of good X always provide the same amount of satisfaction as three (3) units of good Y. The consumer’s income is $100, the price of good X is $10, and the price of good Y is $8. Given the preferences of this consumer, we can write her utility function as U = 3X + 4Y. a. Calculate the optimal quantity of good X for this consumer. b. Calculate the optimal quantity of good Y for this consumer. c. Sketch the consumer’s budget line and indifference curve that passes through the optimal consumption bundle. d. Choose another bundle that exhausts the consumer’s income and show that she prefers the optimal bundle in parts a and b to the bundle yo
Consider two goods that are perfect substitutes such that four (4) units of good X always provide the same amount of satisfaction as three (3) units of good Y. The consumer’s income is $100, the
Given the preferences of this consumer, we can write her utility function as U = 3X + 4Y.
a. Calculate the optimal quantity of good X for this consumer.
b. Calculate the optimal quantity of good Y for this consumer.
c. Sketch the consumer’s budget line and indifference curve that passes through the optimal consumption bundle.
d. Choose another bundle that exhausts the consumer’s income and show that she prefers the optimal bundle in parts a and b to the bundle you have chosen here.
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