Question

Each day Jacqueline, takes lunch at Hill Park Cafeteria. She likes only Twinkies (t) and soda (s), and these provide her a utility of: = (, ) = √ a) If Twinkies cost $0.10 each and soda costs $0.25 per cup, how should Jacqueline spend the $1 her mother gives her in order to maximize her utility? b) If the university tries to discourage Twinkie consumption by raising the price to $0.40, by how much will Jacqueline’s mother have to increase her lunch allowance to provide her with the same level of utility she received in part (a)?

Answer 1

Answer:

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