Question
Please, can you solve this question with details as in the following photos Casper consumes cocoa (x) and cheese (y). His utility function is: U(x,y)=x0,5y0,5
Please, can you solve this question with details as in the following photos
Casper consumes cocoa (x) and cheese (y). His utility function is: U(x,y)=x0,5y0,5 a) Derive Casper's demand functions for cocoa and cheese. b) Casper's income is m=12. Cocoa costs 2 and Cheese costs 2. Calculate the amount of cheese and the amount of cocoa that Casper demands at these prices and this income. Draw his budget line, indifference curve and label chosen consumption bundle A. c) Price of cocoa increases to 4. If, after the price change, Casper's income changed so that he could afford his old consumption bundle, what his new income would have to be? Find Casper's new demanded bundle at the new price of cheese and cocoa, adjusted income. On the graph you have drawn in point b, draw Casper's new budget line, indifference curve and put the label B on his chosen demanded bundle. d) After the price change, when his income is as it was originally, how many units of cheese and cocoa does Casper actually buy? On the graph you have drawn in point b, draw Casper's actual budget line after the price change and new indifference curve. Put the label C on the bundle that he actually chooses after the price change e) Calculate the change in demand for cheese and cocoas which is the result of the substitution and income effect of the price change. f) On separate diagram draw his demand curve for cocoa.
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