Tristan has preferences for computers (C), and robots (R). Computers costs $750 a unit and robots costs $2000 a unit. Tristan has $15000 to spend on both goods. Give the equation for Tristan’s budget line. If robots are on the vertical axis, what is the slope of the budget line? Tristan is a utility maximizer. Describe the utility maximization condition. Using the available information at what value is utility expected to be maximized. It is known that the indifference curve is convex. What does this tell you about the relationship between the goods?

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.11P
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Tristan has preferences for computers (C), and robots (R). Computers costs $750 a unit and robots costs $2000 a unit. Tristan has $15000 to spend on both goods. 

  1. Give the equation for Tristan’s budget line. If robots are on the vertical axis, what is the slope of the budget line?
  2. Tristan is a utility maximizer. Describe the utility maximization condition. Using the available information at what value is utility expected to be maximized.
  3. It is known that the indifference curve is convex. What does this tell you about the relationship between the goods?
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