# 3. Suppose Mary enjoys Pepsi and Coke according to the functionU(P;C) = 4C + 5P. What does her utility function say about her MRS of Coke for Pepsi? What do her indi§erence curves look like? What type of goods are Pepsi and Coke for Mary? If Pepsi and Coke each cost \$1 and Mary has \$20 to spend on these products, how many units of each product should she buy in order to maximize her utility? Show this utility maximiz- ing combination combination of Pepsi and Coke on the graph. how would her consumption and utility maximizing bundle of Coke and Pepsi change if the price of Coke decreases to 50 cents.  4.Vera is an impoverished graduate student who has only \$100 a month to spend on food. She has read in a government publication that she can assure an adequate diet by eating only peanut butter and carrots in the Öxed ratio of 2 pounds of peanut butter to 1 pound of carrots, so she decides to limit her diet to that regime.a) If peanut butter costs \$4 per pound and carrots cost \$2 per pound, how much can she eat during the month?b) Suppose peanut butter costs rise to \$5 because of peanut subsidiesintroduced by a politically sensitive government. By how much will Vera have to reduce her food purchases?c) How much in food stamp aid would the government have to give Vera to compensate for the e§ects of peanut subsidy?d) Explain why Veraís preferences are of a very special type here. How would you graph them?PLEASE HELP MEEE

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3. Suppose Mary enjoys Pepsi and Coke according to the functionU(P;C) = 4C + 5P. What does her utility function say about her MRS of Coke for Pepsi? What do her indi§erence curves look like? What type of goods are Pepsi and Coke for Mary? If Pepsi and Coke each cost \$1 and Mary has \$20 to spend on these products, how many units of each product should she buy in order to maximize her utility? Show this utility maximiz- ing combination combination of Pepsi and Coke on the graph. how would her consumption and utility maximizing bundle of Coke and Pepsi change if the price of Coke decreases to 50 cents.

4.

Vera is an impoverished graduate student who has only \$100 a month to spend on food. She has read in a government publication that she can assure an adequate diet by eating only peanut butter and carrots in the Öxed ratio of 2 pounds of peanut butter to 1 pound of carrots, so she decides to limit her diet to that regime.

a) If peanut butter costs \$4 per pound and carrots cost \$2 per pound, how much can she eat during the month?

b) Suppose peanut butter costs rise to \$5 because of peanut subsidies

introduced by a politically sensitive government. By how much will Vera have to reduce her food purchases?

c) How much in food stamp aid would the government have to give Vera to compensate for the e§ects of peanut subsidy?

d) Explain why Veraís preferences are of a very special type here. How would you graph them?

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