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Q3. Draw a budget constraint that is consistent with the following prices and income.
Given, income = 400, P
= 100, P
= 50 . X is T-shirt and Y is blue jean.
Demonstrate your original budget constraint (Base case)
Demonstrate how your original budget constraint would change if income
increases to 500. (Compared to an original case)
Demonstrate how your original budget constraint would change if P
10. (Compared to an original case)
Q4. Assume a consumer with the Cobb-Douglas utility function:
U (X, Y) = X
where MRS= (MU
The prices are P
= $1 and the income is $100.
a. Find the optimal levels of demand for X* and Y*.
b. What is his utility?
This question was answered on: May 23, 2022
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