1)Edward lives in New York. He can spend his time gathering celery or mayonnaise. He has 16 hours available each day and can gather 4 celery in an hour or 8 mayonnaise in an hour.

a. Draw a diagram of Edwards budget constraint.

b. Given that Edward marginal utility of mayonnaise is always 25 and his marginal utility of celery is always 100, what might be an expression for his utility function.

c. What is his optimal consumption bundle?

Callie offers to exchange any number of goods at a rate of 1 celery for 1 mayonnaise.

d. Draw a diagram of Edward's budget constraint at this exchange rate assuming he will now spend all his time gathering mayonnaise.

e. Is Edward better off?

f. What is his new optimal consumption bundle?