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A consumer has utility for protein bars and vitamin water summarized by the Cobb-Douglas utility function...

A consumer has utility for protein bars and vitamin water summarized by the Cobb-Douglas utility function U(qB,qW) = qBqW.

e. Find the consumer’s Engel curve for vitamin water when PB = PW = 1.

f. What is the consumer’s optimal bundle when M = 100 and PB = PW = 1?

Suppose the price of protein bars increases to P’B = 2.

g. Find the new optimal bundle.

h. Find the substitution effect of the price increase on purchases of protein bars using the Slutsky method.

i. Find the substitution effect of the price increase on purchases of protein bars using the Hicks method.

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