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Suppose that my son likes eating cookies and brownies. His utility function is: we, B) = Gigi where C is the number of cookies and
Suppose that my son likes eating cookies and brownies. His utility function is: we, B) = Gigi where C is the number of cookies and B is the number of brownies. From answering math questions, he has earned 120 credits. He can exchange 4 credits for a brownie and 2 credits for a cookie. (a) On a graph with cookies on the y-axis and brownies on the xaxis, draw his budget constraint. What is the slope of the budget line? (5 points) (b) Calculate the optimal consumption bundle and show it on the graph. Roughly draw the indifference curve that goes through the optimal consumption bundle. (5 points) (c) If I doubled his credits and increased the cost of a cookie to 3 credits, what would have to be the price of brownies such that he is as well off? (5 points) (Note that he can buy fractions of a cookie and brownie)
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