Suppose a caffeine-deprived man needs to wake up suppose, Ask an Expert

Economics

Suppose a caffeine-deprived man needs to wake up. Suppose his preferences on a day can be described by U=3*coffee+2*tea. If the price of coffee is $4 and the price of tea is $1. He has $12 to spend on these drinks on a day.

A. Find his utility for the following consumption combinations:

3 coffee, 0 tea.

1 coffee, 3 tea.

2 coffee, 1.5 tea.

0 coffee, 4.5 tea.

0 coffee, 12 tea.

4 coffee, 6 tea.

8 coffee, 0 tea.

B. Show his budget constraint, indifference curves, and optimal consumption choice in a graph. Use the horizontal axis for coffee and vertical axis for tea.

C. How many cups of coffee does he drink? How many cups of tea? What is his utility?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91520254

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