Question
Chris snacks on cashews (x) and macadamia nuts (y) when he watches TV. His preferences can be represented by the utility function U(x,y) = 2ln
Chris snacks on cashews (x) and macadamia nuts (y) when he watches TV. His preferences can be represented by the utility function U(x,y) = 2ln x + 4ln y where x represents the number of pounds of cashews and y represents the number of pounds of macadamia nuts.
c) Suppose that the price of a pound of macadamia nuts is $10 (the price of cashews and income remain $5 and $45, resp.). Use your demand functions to find his best bundle. Illustrate his best bundle at these prices. For the remainder of the question assume that the price of a pound of cashew rises to $6 and that his income remains constant at I = $45.
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