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4. (15 points) Ernie and Bed, Inc. sells cookies (good x1) and bananas (good A: ). They are offering the following deal to their customers.
4. (15 points) \"Ernie and Bed, Inc." sells cookies (good x1) and bananas (good A\": ). They are offering the following deal to their customers. Although the price of bananas is xed at 1 dollar per unit, the rst three cookies that a consumer buys are free. After the third cookie, the price per cookie is also 1 dollar. Cookie Monster's preferences for both goods are represented by 1181.35) : x1(.?(2 + 3) and his income is 5 dollars. (a) (10 points) Draw Cookie Monster's budget line. (b) (5 points) Find his optimal consumption bundle
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