Question
Asahi's preferences over the consumption of Koshikikari rice (X-rice) and Shirakiku rice (Y-rice) are represented by the utility function u(x, y) = x + y,
Asahi's preferences over the consumption of Koshikikari rice (X-rice) and Shirakiku rice (Y-rice) are represented by the utility function u(x, y) = x + y, where x and y denote the quantities of X-rice and Y-rice, re- spectively, measured in hectograms. Asahi's budget is $200 and the prices per hectogram are px = $10 and py = $4.
(a) Compute Asahi's marginal rate of substitution between Y-rice and X-rice.
(b) Compute Asahi's optimal consumption bundle. What are his expenditure shares? What is Asahi's utility level associated with his choice of Y-rice and X-rice?
(c) Let {18, y1}, {10, y2} and {2, y3} be three bundles of X-rice and Y-rice that make Asahi indifferent to his own choice of X-rice and Y-rice. Compute y1, y2 and y3. Compute the total purchase price of the three bundles. Are the bundles feasible?
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