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Josh has a monthly income of $1000. He spends this income on gummy bears (G) and other goods (X). The first 2500 gummy bears always
Josh has a monthly income of $1000. He spends this income on gummy bears (G) and "other goods" (X). The first 2500 gummy bears always cost $0.2 per unit. When buying more than 2500 gummy bears, they are offered at a discounted price of $0.1 per unit for any amount above 2500. The unit price of the "other goods" is $1. 1. Draw the budget set. 2. Using optimization techniques, determine Josh's optimal bundle given that his preferences can be represented by the utility function U(G, X) = GX. Make sure to also Illustrate your answer graphically. 3. Suppose instead that Josh's utility function is V(G, X) = VGX -25. How would that change your answer to subquestion 2? Explain
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