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Problem 4. Now suppose Bubbles has to decide between candy produced by the Barksdales xb or by the Stanfields xs. His utility function for the
Problem 4. Now suppose Bubbles has to decide between candy produced by the Barksdales xb or by the Stanfields xs. His utility function for the two goods is u(xb, xw) = x^3/4_b x^1/4_s . pb = 30, ps = 20, and m = 80. (f) What is Bubbles budget line for the two goods? (g) What are Bubbles arbitrary demand functions for each good? (It should be in terms of m, pb/ps) (h) What is Bubbles optimal bundle under the given prices and income?
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