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Nick's utility function for croissants (C) and lattes (L) can be described as U(C,L)=C0.5L0.5 , where each croissant costs $2 and each latte costs $6
Nick's utility function for croissants (C) and lattes (L) can be described as U(C,L)=C0.5L0.5 , where each croissant costs $2 and each latte costs $6 . Each week, he allocates $196 to buying these two goods. His marginal utility for croissants is MUC=L0.52C0.5 and his marginal utility for lattes is MUL=C0.52L0.5 . For all answers below, round your intermediate calculations and answer to 2 decimal places (example: 0.01) if necessary. Use rounded numbers in later steps of the problem. Part (a): How many croissants and lattes are in Nick's initial utility-maximizing bundle (Bundle A)? Suddenly, the price of croissants rises to $4. Part (b): How many croissants and lattes are in Nick's final utility-maximizing bundle (Bundle C)? Part (c): How many croissants and lattes are in Nick's decomposition bundle (Bundle B)
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