Zoey has $3 budget in total and can spend her money on cookies (x) and bananas (y).She has preferences over cookies and bananas represented by u(x,y) = x^2y. The first 5 cookies are free for Zoey, but each additional cookie costs $1. Bananas are always $1 each. (a) Draw her feasible budget set, identifying all the intercepts, kinks, etc... (b) What is her optimal bundle? (c) What is her optimal bundle if she only had a $2 budget? (d) Suppose she has $2 budget, but now not only the first 5 cookies are free, but also the first 3 bananas (additional cookies or bananas are $1 each as before). Draw her budget set and calculate her optimal bundle
Zoey has $3 budget in total and can spend her money on cookies (x) and bananas (y).She has preferences over cookies and bananas represented by u(x,y) = x^2y. The first 5 cookies are free for Zoey, but each additional cookie costs $1. Bananas are always $1 each.
(a) Draw her feasible budget set, identifying all the intercepts, kinks, etc...
(b) What is her optimal bundle?
(c) What is her optimal bundle if she only had a $2 budget?
(d) Suppose she has $2 budget, but now not only the first 5 cookies are free, but also the first 3 bananas (additional cookies or bananas are $1 each as before). Draw her budget set and calculate her optimal bundle
![](/static/compass_v2/shared-icons/check-mark.png)
The Budget line shows all the possible combinations of two commodities that the consumer can afford at the given market prices and the income level that is fixed.
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