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Trevor loves strawberry milkshakes. To prepare each shake, he mixes milk (q1) with strawberries (q2), and always does so in his favorite ratio: 1 glass
Trevor loves strawberry milkshakes. To prepare each shake, he mixes milk (q1) with strawberries (q2), and always does so in his favorite ratio: 1 glass milk to 5 strawberries. Assume he would never deviate from these proportions when making a shake. Any extra strawber- ries or extra milk is thrown away. Trevor has a budget of $12, and at the store he shops at the price milk is $1.50 per glass, and the price of strawberries is $0.50 each. i. Provide the name of these specific kinds of preferences. What is a utility function that represents these prefer- ences? ii. Find Trevor's optimal bundle of milk and strawberries. iii. A new store opens that sells milk for $2 per glass and strawberries for $0.40 each. If Trevor shops at the new store, what is Trevor's optimal quantities of milk and 1 strawberries (assume he can only shop at one store)?. Trevor can only shop at one store - is Trevor better off shopping at the new store or the old one? iv. Derive Trevor's demand equation for milk: q1 = D1(p1,p2,Y
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