Tanya has a budget of £21 to spend on toothbrushes and tooth paste. she does not receive any utility from owning a toothbrush, but for the consumption of every tube of tooth paste she gains a utility of 2 utils – but only if she owns a tooth brush. Without a tooth brush, Tanya gains no utility from consuming tooth paste. In addition, after consuming 10 tubes of tooth paste, a toothbrush needs to be replaced, i.e., Tanya needs to buy a new one. The current price of tooth brushes on the market is £5 and the current price for tooth paste is £1 per tube. Assume that Tanya aims to maximise consumer surplus. (Tanya does not gain any utility from consuming tooth brush, she gains 2 utilities from consuming 1 tube of tooth paste, but the tooth brush need to be replaced after consuming 10 tubes of toothpaste. Without tooth brush, Tanya gain zero utility from consuming any tooth paste) (This is not a writing assginment and only need to find out income-consumption curve) Find Tanya's income-consumption curve for tooth paste tubes for incomes between £0 and £21, assuming a price of £1 per tube.
Tanya has a budget of £21 to spend on toothbrushes and tooth paste. she does not receive any utility from owning a toothbrush, but for the consumption of every tube of tooth paste she gains a utility of 2 utils – but only if she owns a tooth brush. Without a tooth brush, Tanya gains no utility from consuming tooth paste. In addition, after consuming 10 tubes of tooth paste, a toothbrush needs to be replaced, i.e., Tanya needs to buy a new one. The current
(Tanya does not gain any utility from consuming tooth brush, she gains 2 utilities from consuming 1 tube of tooth paste, but the tooth brush need to be replaced after consuming 10 tubes of toothpaste. Without tooth brush, Tanya gain zero utility from consuming any tooth paste)
(This is not a writing assginment and only need to find out income-consumption curve)
Find Tanya's income-consumption curve for tooth paste tubes for incomes between £0 and £21, assuming a price of £1 per tube.
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