1. A consumerr who has $360 in income and faces a constant price of P = 5 for soupr has the following demand cunre for nuts: Price of nuts Quantity demanded of nuts 3 T0 5 35 B 20 a) Draw 3 different budget constraints for the consumerr all on 1 set of axes with nuts on the horizontal axis. On each budget, be sure to show the value of the intercepts, the indifference cunre through the utility maximizing bundle, and the coordinates of that bundle. {5 points) Based on the information and graphs previously described. explain whether or not each of the following statements are true. {2 points each) b} The bundle (TB, 3D) has more utility than the bundle (54. 33) c} The MRS for the consumer at the bundle [35, 3?} is less than 1 d} From this data, the goods appear to be substitutes. 2. Consider a consumer who is choosing between Romaine and Boston lettuce. Assume that the utilities of consuming these goods are independent. That is, the utility of the first head of Romaine is the same whether you have consumed o heads of Boston or 5 heads of Boston. The total utilities for each good are as follows: Rom. Utility Boston Utility Rom. Utility Boston Utility 1 5B 1 2t] 5 113 5 T? 2 BB 2 3B 6 118 6 B3 3 95 3 54 T 121 T 85 4 ME 4 68 a} Find the utility maximizing combination of Boston and Ftomaine under the following conditions: {2 points each) D price of Ftom. = $5 per head, price of Boston = $2 per head. $20 of income ii} price of Rom. = $5 per head. price of Boston = $5 per head. $2o of income. b] For which of these goods can you find two points on the demand cu rye? Find those two points and draw a picture of the demand. {2 points) Now assume that these good are ayailable in in continuous quanties and we are making a graph with Rom. on the horizontal axis. c} Graph the indifference cunre containing the bundle (3,2) = 3 Ftom. and 2 Boston. Label two other specific points on the curve. (3 points) d} Use this information to put bounds on the value of the MRS at the point (3.2}. [2 points)