Question

Magnus enjoys eating nuts and berries. He has a utility function U(C1,0) = 42009, where 0 constant, as is the consumption of nuts and en is his consumption of berries. Suppose the price of a unit of
nuts is 1 and the price of a unit of berries is 2. Given Magnus' income is 24, draw Magnus' budget line. How
many units of nuts and berries does he buyFor what values of a does Magnus consume positive amounts
of both nuts and berries?

Answer 1

Answer:

Magnus enjoys eating nuts and berries. He has a utility function U(c1,c2)=c2a−c1U(c1,c2)=c2a−c1, where 0<a<10<a<1 is a constant, c1c1 is the consumption of nuts and c2c2 is his consumption of berries. Suppose the price of a unit of nuts is 1 and the price of a unit of berries is 2. Given Magnus' income is 24, draw Magnus' budget line. How many units of nuts and berries does he buy? For what values of aa does Magnus consume positive amounts of both nuts and berries?