Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please can you help me draw the indifference cure and find the optimal bundle 2. (42 points) Alice and Bob both like apple pie (A)

please can you help me draw the indifference cure and find the optimal bundle

image text in transcribed
2. (42 points) Alice and Bob both like apple pie (A) and coffee (C). Alice's utility function is U(A, C) = AFC . For Bob, apple pie and coffee are perfect complements. He always likes to drink exactly two coffee with each apple pie. (In all diagrams below, A should be on the x-axis). (a) (10) Draw some indifference curves for Alice. What is her MRS? (b) (10) Write down Bob's utility function and draw some indifference curves. What is his MRS? (c) (6) The prices of the goods are PA = 4 and Pc = 2. Alice and Bob each has an income of m = 80 . Write the budget constraint for either one of them. (d) (8) What is Alice's optimal bundle

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Rediscovering Sustainability Economics Of The Finite Earth

Authors: ARG Heesterman

1st Edition

1317069846, 9781317069843

More Books

Students also viewed these Economics questions

Question

A greater tendency to create winwin situations.

Answered: 1 week ago

Question

Improving creative problem-solving ability.

Answered: 1 week ago