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Connie has a monthly income of $200that she allocates among two goods meat and potatoes Suppose meat costs $4 per pound and potatoes $2 per pound Draw her budget constraint

Connie has a monthly income of $200that she allocates among two goods: meat and potatoes.

a. Suppose meat costs $4 per pound and potatoes $2 per pound. Draw her budget constraint.

b. Suppose also that her utility function is given by the equation u(M, P) = 2M + P. What combination of meat and potatoes should she buy to maximize her utility? (Hint: Meat and potatoes are perfect substitutes.)

May 02 2020 View more View Less

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