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Consider again Cece determining how much of two goods, burgers (x), and clothes (y), she should purchase with a weekly income. Cece makes $1,500 per
Consider again Cece determining how much of two goods, burgers (x), and clothes (y), she should purchase with a weekly income. Cece makes $1,500 per week. The price of a burger is $5, (i.e. ), and the price of an article of clothing is $25, (i.e. ). Furthermore, Cece's utility function is U (x,y)= 3xy
- Plot Cece's budget line, labeled, in a commodity space of burgers and clothes.
- Assume burgers to be the horizontal-axis good and clothes to be the vertical-axis good.
- Indicate on the axes the maximum amount of burgers and clothing Cece can purchase in a week (i.e. the vertical- and horizontal-axis intercepts).
- Solve for Cece's utility-maximizing bundle, of burgers and clothing. Show your work.
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