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Utility Function: U(t, s) = 4ts Price of t: Pt = $5 Price of s: Ps...

Utility Function: U(t, s) = 4ts

Price of t: Pt = $5

Price of s: Ps = $10

Income: M = $100

(Assume that t is measured on the horizontal axis and s is measured on the vertical axis.)

a. Write the equation of the Budget Line in the form of total spending = income. Plug in specific numerical values.

b. Solve for the values of t and s that maximize the Utility Function subject to the Budget Line to identify the Consumer Equilibrium.

c. Calculate the Utility using the Consumer Equilibrium values of t and s obtained in part b (i.e., U(t*, s*)).

d. Draw a graph labeling the horizontal and vertical intercepts of the Budget Line and including an indifference curve that identifies the Consumer Equilibrium.

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