Question

Given an income of $1000 allocated to buy 2 different types of goods A and B...

Given an income of $1000 allocated to buy 2 different types of goods A and B

(a) Suppose A costs $50 and B costs $20 , draw budget constraint

(b) utility function is given by U(A,B)=2A+5B. What combination of goods A and B should be bought to maximize utility

(c) In a sale if you buy 10 units of B (@ $20) you get 10 units of B for free. offer applies only to the first 10 units you buy. All units of B purchased in excess of the first 10 units(excluding free units you get in sale) are still sold at the rate of $20. Draw budget constraint.

(d)Suppose A costs $50 and B costs $150 , draw budget constraint. utility function is given by U(A,B)=2A+5B. What combination of goods A and B should be bought to maximize utility

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