Question
Pan Man gets utility from consuming pancakes which are made out of flour and sugar. All inputs are measured in cups. He cannot combine the
Pan Man gets utility from consuming pancakes which are made out of flour and sugar.
All inputs are measured in cups.
He cannot combine the two ingredients in very different quantities. The ratio of flour and sugar it uses must fall between 1:2 and 2:1. Otherwise the pancakes will fall apart, and the Pan Man will get no utility. He must discard any amounts of the two inputs that outside these ratios. Pan Man's utility from pancakes that do not fall apart is:
U(F, S) = FS
Where F is the number of cups of flour and S the cups of sugar.
(a) Draw a graph (with 2 units each on both axes): draw a red line through all combinations of flour and sugar that are in the ratio 1 to 2. Draw a blue line through combinations of flour and sugar that are in the ratio 2 to 1. (If you do not have colours, just label them "red" and "blue".)
(b) How much utility does the Pan Man get from the following bundles of flour and sugar:
U(2, 12) = ____________ U(4, 10) = _________________ U(8, 4) = ____________ U (10, 4) = _________________
(c) Neatly draw an indifference curve between all combinations of flour and sugar that represents the preferences of Pan Man and gives him a utility of 32.
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