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Melissa's utility function is U = min (L, E/2, 2T)   where L are lattes, E are eggs, and T is toast.

She is on a diet, and her calorie constraint for breakfast is Cbar = 600 calories. Suppose lattes have 300 calories, eggs have 100 calories, and toast also has 100 calories per serving.

a. What type of utility function is this? Are these good complements, substitutes, or perfect substitutes?

b. If she has to eat only whole servings, what will she have for breakfast, and how many calories will she consume? If she can eat partial servings, how would your answer differ?

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M91340968

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