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Assume the price of beer is $4, the price of pizza is $10 and the consumer's...

Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $340. If the consumer's preference can be expressed as U(b,z)=min (2/3*b, 4*z). What is the optimal bundle?

A. 60 beers 10 pizzas

B. 24 beers 24 pizzas

C. 15 Beers 5pizza

D. None of the Above

Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $340. If the consumer's preference can be expressed as U(b,z)=min (2/3*b, 4*z). Now, the price of beer increases from $4 to $5 and everything else remains equal, what is the optimal bundle? (hint: price of pizza is still $10 and consumer's income remains $340)

A. 60 beers 10 pizza

B. 24 Beers 5 pizza

C. 31 beers 8.5 pizza

D. None of the above

Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $340. If the consumer's preference can be expressed as U(b,z)=b^(3⁄4) z^(1⁄4) {^ means power}. What is the optimal bundle? Hint: MUb=3/4*b^(-1/4)*z^(1/4) and MUz=1/4*b^(3/4)*z^(-3/4).

A. 63.75 beers 8.5 pizza

B. 51 beers 10 pizza

C. 60 beers 10 pizza

D. None of the above

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