This question refers to a hypothetical social drinker called |Carlota who goes to a pub every evening. It is assumed that she is willing to select her weekly consumption of two products beer (X) and wine (Y) _s_g__a_I_s__t_g maximize her satisfaction. |C'.'arlota has not been able to describe her utility function U : U(x,y) with a specific formula, but after carefully introspection, she has been able to draw three indifference curves (shown in Figure 1) on which to base her choice of x (number of glasses of beer per week) and 3: (number of glasses of wine per week). |Garlota needs to sort out what happens with her satisfaction in two different situations. Situation 1 Last week Carlota spent $100. 00 on social drinking in a North Wollongong pub where she paid $4. 00 for each glass of beer and $8- 00 for each glass of wine. Situation 2 This Monday, Carlota found another pub in the North Beach where one glass of beer cost $2.00 and one glass of wine $4. 00. She is planning to take advantage of this nding and reduce her spending on social drinking to just $50.00 per week, even though this could reduce her maximum level of satisfaction.