Li has decided to spend $20 on crisps monthly. In his local supermarket, he can find 2 brands. Bulkers and Fringles. For Li, Bulkers and Fringles are perfect substitutes. For each bag of Bulkers crisps, Li gains a utility of 5 utils and for each bag of Fringles crisps he gains 8 utils.

The current price of a bag of Bulkers crisps is $1. The current price of Fringles crisps is $1+(b/10 ), where b follows from your candidate number. If b =5.

a)What function describes Li's total utility best?

b)Draw Li's budget line and draw the indifference curves for utility levels 80 and 120.

c)What is the consumption bundle that maximizes Li's total utility?

Bulkers introduces a new temporary offer: for every 4 bags of Bulkers, customers receive 1 bag for free.

d)Draw the new budge line and determine the new optimal consumption bundle.