Carol needs to decide how to spend her wealth on sh and chicken. For Carol, 1 lb of sh is equivalent to 2 lb of chicken. Her preferences 2 Intermediate Microeconomics NYUAD, Spring 2023 can be represented by the utility function u(x; y) = 2x + y where x is the quantity of sh (in lbs) and y is the quantity of chicken (in lbs). The consumption set is R2 +. (a) Draw two typical indi erence curves for Carol, one corresponding to a utility level of u1 and one corresponding to a utility level u2, where 0 < u1 < u2. Make sure you label the slope of the indif- ference curves and the intercepts with the horizontal and vertical axes. (b) Suppose the price of sh is $1:5 per lb and and the price of chicken is $1 per lb. Carol has $20 to spend on sh and chicken. (i) Draw Carol's budget set, labeling the slope and the intercept points clearly. (ii) How much sh and chicken will Carol choose to purchase?
Carol needs to decide how to spend her wealth on sh and chicken.
For Carol, 1 lb of sh is equivalent to 2 lb of chicken. Her preferences
2
Intermediate
can be represented by the utility function
u(x; y) = 2x + y
where x is the quantity of sh (in lbs) and y is the quantity of chicken
(in lbs). The consumption set is R2
+.
(a) Draw two typical indi erence
to a utility level of u1 and one corresponding to a utility level u2,
where 0 < u1 < u2. Make sure you label the slope of the indif-
ference curves and the intercepts with the horizontal and vertical
axes.
(b) Suppose the price of sh is $1:5 per lb and and the price of chicken
is $1 per lb. Carol has $20 to spend on sh and chicken.
(i) Draw Carol's budget set, labeling the slope and the intercept
points clearly.
(ii) How much sh and chicken will Carol choose to purchase?
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