Suppose that Angie consumes only beer(B) and sandwiches (S). Her MU B = S/B and MU S
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Suppose that Angie consumes only beer(B) and sandwiches (S). Her MUB = S/B and MUS = 2B/S. The price of a sandwich is $8 and the price of a beer is $4.
A) If Angie is consuming 10 sandwiches and 16 beers each month, is she maximizing utility? If she is, explain how you know. If she is not, explain what she should do in order to increase her utility.
B) If Angie has $120 to spend each month on beer and sandwiches how many of each would she buy?
C) If the price of beer increases to $6, what happens to the quantity Angie demands?
D) Using your answers, draw Angie's demand curve for beer.
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