Question
I need help with question 5 from this document. Here is the question: 5) Mark has preferences between guns and banjos that are described by
I need help with question 5 from this document. Here is the question:
5) Mark has preferences between guns and banjos that are described by the utility function U(B,G) = G + B . Assume that both goods can be consumed in fraction.
a. What is the optimal consumption bundle (i.e. demanded bundle), if pG=$4, pB=$1 and Y=$16?
b. What is the optimal consumption bundle if pG =$4, pB =$1 and Y=$2?
c. Find Mark's individual demand of Banjo as a function of price of banjo (pB), price of gun (pG) and income (Y).
d. Are two goods substitutes, complements or neither?
e. Draw the Engel curve at pG =$4, pB =$1.
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