Question

Marco consumes chicken (C) and rice (R) for his meals. The price of a unit of chicken is $6, and the price of a unit of rice is $2.

Jon's utility function is: U = (3C)*(2R)

Jon has $132 to spend on chicken and rice."

a) For U = 100, which of the following (C,R) points are on the indifference curve?

Group of answer choices

(30,20)

(10,35)

(4, 54)

(0,50)

b) Is the indifference curve linear or non-linear?

c) Determine Jon's optimal bundle of chicken and rice to consume, given his budget and utility function.

Enter Jon's optimal amount of rice to consume (enter as a numeric value).

d) Now rice goes on sale for $1 per unit of rice. Now determine Jon's optimal bundle of chicken and rice to consume.

Enter Jon's optimal amount of rice to consume (enter as a numeric value).

e)  If there is a supply disruption and there is no chicken to purchase, what happens to Jon's utility? (Budget is still $132.)

Group of answer choices

Decreases to a small but positive amount

Becomes zero

Isn't effected

Do just the part c , d and e

Answer 1

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^ after price of rice is halved, consumption of rice doubles (from 33 to 66) but consumption of chicken is unchanged.

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