Mead N. Taters likes only Steak (S) and potatoes (T), and gets utility from them according to:

U = S^1/4T^3/4.

No matter how much Mead has to spend on groceries and no matter what the prices of steak and potatoes are, he always spends (1)____25_____ % on steak and (2)____75____ % on potatoes.Thus, if Mead has $20.00 to spend on groceries, he will spend (3) $___5___ on steak and (4) $___15___ on potatoes.If the price of steak is $2.00 per pound and the price of potatoes, p_t, is $.50 per pound, he will buy (5)__2.5___ pounds of steak and (6)____30____ pounds of potatoes.If the amount he has to spend on groceries, the price of steak, and the price of potatoes all double, he will then buy (7)___1.25___pounds of steak and (8)____15___ pounds of potatoes.Would answers (7) and (8) change if Mead had any alternative "well-behaved" utility function like a CES utility function? (9)____NO__. Why or why not? (10)

There will be no change because the level of satisfaction achievable at income m=$20 is the same at the prevailing vector of prices.

Let I represent the amount of income that Mead budgets for food.In words, what is the interpretation of P_SS/I?

(11)____________________________________________________________________________________

No matter what P_S and I are, Mead always chooses S so that P_SS/I = (12)_________________.

Now turn this relationship around and write S as a function of P_S and I: (13) S = __________.

The analogous equation for T is T = (14)_________________________.

Use your results to obtain the indirect utility function of Mead.That is, substitute your functions for S and T into hisutility function so that U is written as a function of P_S, P_t, and I:

(15) U =

Now, find Mead^,s expenditure function.That is turn your indirect utility function around so that I is a function of P_S, P_t, and U.Viewed in this way, the function tells you how much Mead has to spend in order to achieve utility level U at prices P_S and P_t:

(16) I =

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