Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Can I have some help with this 3. A consumer is making peanut butter and jelly sandwiches. Each sandwich requires 1 ounce of jelly (J)
Can I have some help with this
3. A consumer is making peanut butter and jelly sandwiches. Each sandwich requires 1 ounce of jelly (J) and 3 ounces of peanut butter (P) and a completed sandwich gives the consumer exactly one utility (you can assume they have unlimited bread already). The consumer does not get any utility from peanut butter and jelly on their own. (a) What does this consumer's utility function look like? (Hint: Make sure plugging in J=l and P23 gives exactly one utility) (b) Explain why U : min(3J, P) also represents this consumer's preference. How much utility does each sandwich give in this case? (c) Draw an indifference curve for the utility function in part b. (d) Assume that the consumer has $5 to spend on peanut butter and jelly sandwiches, the price of peanut butter is 50.20/02 and the price ofjelly is $0.40/oz. How much does each sandwich cost? How many sandwiches can the consumer make given their budget. How many ounces of peanut butter and jelly will they buy? (e) if the price of peanut butter increased, what happens the consumer's consumption of peanut butter (increase, decrease, or stay the same)? What happens to their consumption ofjelly? (f) Now assume that the consumer instead wants to achieve a total of 15 utility (using the utility function from part b). How many sandwiches do they need to make to achieve this level of utility? How many ounces of peanut butter and jelly do they need to make this many sandwichesStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started