#1. (16 marks) There are two goods in the economy - food F and light bulbs B (used for the street light). Janes utility is given by U = 4F2 + 2B, her income is $60 and prices are P1 = 1 and Pa = 1. (a) How much of each good will she consume if she has to purchase everything by herself? What is her utility level? (b) How much of each good will she purchase herself, if her neighbour provides B=10 and she can consume her neighbour's street light without paying for it? What is her utility level? (c) What is the minimum quantity of bulbs her neighbour needs to provide, for Jane to optimally choose to fully free-rider on her neighbour's street light (i.e., not to purchase any additional bulbs herself)? How much F will she consume? What is her utility level? (d) What happens to the quantities of F and B Jane purchases herself if the neighbour provides B > Bmin calculated in (c)? What total quantity of B will be consumed? Why? Show her new utility maximizing consumption point on the graph. #1. (16 marks) There are two goods in the economy - food F and light bulbs B (used for the street light). Janes utility is given by U = 4F2 + 2B, her income is $60 and prices are P1 = 1 and Pa = 1. (a) How much of each good will she consume if she has to purchase everything by herself? What is her utility level? (b) How much of each good will she purchase herself, if her neighbour provides B=10 and she can consume her neighbour's street light without paying for it? What is her utility level? (c) What is the minimum quantity of bulbs her neighbour needs to provide, for Jane to optimally choose to fully free-rider on her neighbour's street light (i.e., not to purchase any additional bulbs herself)? How much F will she consume? What is her utility level? (d) What happens to the quantities of F and B Jane purchases herself if the neighbour provides B > Bmin calculated in (c)? What total quantity of B will be consumed? Why? Show her new utility maximizing consumption point on the graph