(Answered) If air quality is a2 how much housing will jose purchase?

Economics

Suppose housing (H) and air quality (A) are the only two things entering Jose's utility which has the form U(H,A) = A*H . Suppose Jose's income is $10 and the price of housing is $2.

a) If air quality is A=2 how much housing will Jose purchase? Sketch his indifference curve and budget line.

b) Suppose air quality rises to A= 4 Plot Jose's new indifference curve and new consumption point.

c) How much would Jose be willing to pay to increase air quality from 2 to 4?

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