BUSHMAN Ltd aims to produce quality products that will maximize consumer satisfaction given what they can afford to pay. based on data gathered from the company's customer satisfaction survey which shows that the average consumer spend his/her income on a combination of brand-name drugs and generic alternatives.

Use the budget constraint below which shows a customer's weekly purchase of brand-name and generic drugs to answer the following

a)Identify the economic meaning of each of the choice points: A, B, C, D, and E.

b)What is the opportunity cost of a brand name drug?

c)If the consumer spends $1000 on drugs for the week

i.What is the price of a generic drug?

ii.What is the price of a brand name drug?

iii.illustrate the customer budget lines if the price of brand name drug double

d)Explain with reasonswhether you agree or disagreewith the following statements.

i.If the prices of both goods increase by the same proportion as income, the budget constraint shift outward

ii.If income increases with no change in relative prices, the budget line will move parallel to itself.

iii.If all prices double, then the budget line will become steeper.

e)If at the current level of consumption, a customer's marginal utility from the last brand name drug consumed is 400 and the marginal utility from the last generic drug is 300. If you use the prices from part c:

a.Is this consumer maximizing his utility? Why or why not?

b.If not, what should this consumer do to achieve a higher level of utility? Justify your answer.