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Joe has the following utility function: (, ) = 3x+y , where is his consumption of candy bars, with = $1, and is coffee, with
Joe has the following utility function: (, ) = 3x+y , where is his consumption of candy bars, with = $1, and is coffee, with = $2. a) Assume that his income is $100. How many candy bars and how much coffee will Joe consume? b) Suppose the price of coffee decreases from $2 to $1. What is the total effect of the price decrease on Joe's consumption of coffee? c) What is the substitution effect? What is the income effect
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