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Diogo’s utility function is U(q1, q2)=q10.75q20.25 where q1 is chocolate candy and q2 is slices of...

Diogo’s utility function is U(q1, q2)=q10.75q20.25 where q1 is chocolate candy and q2 is slices of pie. If the price of a chocolate bar, p1, is $1, the price of a slice of pie, p2, is $2, and Y is $80,

a.Now suppose price of chocolate bar increases to $2. What will be Diogo’s optimal bundle now?

b. Underneath the above diagram, draw Diogo’s demand curve. Does Diogo’s utility rise as you move up along his demand curve? What happens to his income?

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