Suppose Mary enjoys Pepsi and Coke according to the function U(P;C) = 4C + 5P. 1....

Suppose Mary enjoys Pepsi and Coke according to the function U(P;C) = 4C + 5P.

1. What does her utility function say about her MRS of Coke for Pepsi?

2. What do her indi§erence curves look like?

3. What type of goods are Pepsi and Coke for Mary?

4. If Pepsi and Coke each cost $1 and Mary has $20 to spend on these products, how many units of each product should she buy in order to maximize her utility?

5. Show this utility maximiz- ing combination combination of Pepsi and Coke on the graph. how would her consumption and utility maximizing bundle of Coke and Pepsi change if the price of Coke decreases to 50 cents.

Please explain throughly!

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Expert Solution

Rahul Sunny answered 11 months ago

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