ironboot1`
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- Nov 3, 2019
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Hi not sure if this is the right site for this but i'm in desperate need of help with a economics optimal choice problem as i am completely stuck and have no clue on what to do on this part all i know is it's a perfect substitute question but i'm clueless on how to find the price of whisky. Any help at all would be much appreciated
Chuck likes beer and whisky and spends $80 in total on drink. His utility function for whisky (w) and beer (b) is U = 10w + b: He can buy beer at $2 a can but the liquor store tries to discourage overconsumption of spirits by charging higher prices for larger quantities: the cost in dollars of w bottles of whisky works out at 5w^2
(a) How many cans of beer and how many bottles of whisky does Chuck consume?
(b) Illustrate your answer with a clearly labelled diagram showing Chuck's budget constraint and his indifference curve passing through the optimal consumption bundle.
Chuck likes beer and whisky and spends $80 in total on drink. His utility function for whisky (w) and beer (b) is U = 10w + b: He can buy beer at $2 a can but the liquor store tries to discourage overconsumption of spirits by charging higher prices for larger quantities: the cost in dollars of w bottles of whisky works out at 5w^2
(a) How many cans of beer and how many bottles of whisky does Chuck consume?
(b) Illustrate your answer with a clearly labelled diagram showing Chuck's budget constraint and his indifference curve passing through the optimal consumption bundle.