Question
Sansa collects Hummel figurines and Barbie dolls. Let H and B designate the number of pieces in each collection, respectively. Her utility functionis U(H, B)
Sansa collects Hummel figurines and Barbie dolls. Let H and B designate the number of pieces in each collection, respectively. Her utility functionis U(H, B) = max{3H, B}. ("max{x,y}" refers to "taking the maximal numberamongst the parameters." For example, max{2, 4} = 4.) Sansa has $140 to spendon her collection. The Hummel figurines cost $5 each and Barbie dolls cost $2 each.
(a)Draw and label Sansa's indifference curves for U = 3 and U = 6 in the same graph. [4 marks]
(b) FindSansa'soptimal bundle, indicating the number of Hummel figurines andthe number ofBarbie dolls in this optimal bundle. [6 marks]
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started