A child budget is 3 dollars and she has two options 1)ice cream 2) cake. Her utility function is u(x,y)=yx2. The first five ice cream cones are free but each additional cone will cost 1$. Cakes are 1$ at any amount. 1)Find an optimal bundle. What will happen with optimal bundle if she has $2 budget.
A child budget is 3 dollars and she has two options 1)ice cream 2) cake. Her utility function is u(x,y)=yx2. The first five ice cream cones are free but each additional cone will cost 1$. Cakes are 1$ at any amount. 1)Find an optimal bundle. What will happen with optimal bundle if she has $2 budget.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 9SQP
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A child budget is 3 dollars and she has two options 1)ice cream 2) cake. Her utility function is u(x,y)=yx2. The first five ice cream cones are free but each additional cone will cost 1$. Cakes are 1$ at any amount. 1)Find an optimal bundle. What will happen with optimal bundle if she has $2 budget. 2) Find and draw budget set. What will happen with budget set if the child has 2$ budget but now she has 3 free cakes in additional to ice cream cones.
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