Nasser’s preferences over juice (j) and sandwiches (s) are given by U(J, S) = √J + √S Suppose that the price of a bottle of juice is 3 KD and the price of a sandwich is 1.5 KD, and Nasser can spend a combined total of 36 KD each day on these goods. a. Express Nasser’s consumer choice problem. b. Find the marginal rate of substitution of sandwiches for juice. c. Find Nasser’s optimal consumption basket.
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Nasser’s preferences over juice (j) and sandwiches (s) are given by U(J, S) = √J + √S
Suppose that the price of a bottle of juice is 3 KD and the price of a sandwich is 1.5 KD, and Nasser can spend a
combined total of 36 KD each day on these goods.
a. Express Nasser’s consumer choice problem.
b. Find the marginal rate of substitution of sandwiches for juice.
c. Find Nasser’s optimal consumption basket.
d. Given that Nasser maximizes his utility, explain how Nasser’s
to his marginal utility per KD spent on sandwiches? (Make sure to calculate these values)
e. If Nasser decides to buy 6 bottles of juice and 12 sandwiches, show how his marginal utility per KD spent on
juice compare to his marginal utility per KD spent on sandwiches?
f. Draw a rough sketch of Nasser’s indifference curve and budget line. Label his optimal basket and place juice
on the vertical axis and sandwiches on the horizontal axis.
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