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Suppose Joe's utility for lobster (L) and soda (S) can be represented as U = L 0.5 S 0.5 . Joe walks into a restaurant
Suppose Joe's utility for lobster (L) and soda (S) can be represented as U = L0.5S0.5. Joe walks into a restaurant with $72 and intends to spend it all there. Lobsters cost $18 each and sodas cost $2 each.
- Plot Joe's budget constraint, with Soda on the y-axis and Lobster on the x-axis.
- Derive an expression to represent the additional utility that Joe gets from consuming an additional lobster.
- Derive an expression to represent the additional utility that Joe gets from consuming an additional soda.
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