Jen’s utility function is U (X, Y ) = (X + 2)(Y + 1), where X is her consumption of good X and Y is her consumption of good Y .
a. Write an equation for Jen’s indifference curve that goes through the point (X, Y ) = (2, 8). On the axes below, sketch Jen’s indifference curve for U = 36
b. Suppose that the price of each good is 1 and that Jen has an income of 11. Draw in her budget line. Can Jen achieve a utility of 36 with this budget?
c. At the commodity bundle, (X, Y ), Jen’s marginal rate of substitution is?
d. If we set the absolute value of the MRS equal to the price ratio, what is the equation you find?
e. What is the equation for the budget constraint?
f. Solve these two equations for the two unknowns, X and Y .
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