Question
There are two goods, fancy good (F) and a staple good (s). The price of F is $10 and the price of S is $1.
There are two goods, fancy good (F) and a staple good (s). The price of F is $10 and the price of S is $1. The consumer's income is I = $100. Suppose the consumer like F but does not care at all about S. The utility maximizing consumption of F, subject to the consumer's budget constraint is ____ while the consumption of S is ____. Now assume that each unit of F gives 10 calories and each unit of S 26 calories. The consumer must consume at least 500 calories. The utility maximizing consumption of F, subject to the budget and the calories constraint, is (round your answer to 2 decimals) ____ and the consumption of S is _____. Suppose now S becomes cheaper; the price decreases to $0.4. The utility maximizing consumption of F subject to the budget and the calories constraint is (round your answer to 3 decimals) _____ and the consumption of S is ____. The Staple good (S) is an ordinary good. - True or False
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