5 bill 5 bill Household consumption 2000 Beginning – of – year inventory stocks 1000 Depreciation 100 End – of – year inventory stocks 800 Exports
September 3, 2020
56F Use the following graph showing a consumer’s budget line and some indifference curves to answer the following questions. The consumer’s income is…
September 3, 2020

Lauren likes to have 2 bottles of sports drink (X) when she plays 3 hours of basketball (Y). Her

preferences are represented by the following utility function: U(X,Y) = min(3X, 2Y). Her budget is $60,

and the price of a sports drink is $2.50 and 1 hour of basketball is $10.

What is Lauren’s optimal choice for drinks and basketball given her budget? Illustrate her optimal choice

on a graph, using indifference curve-budget line analysis. Include the value of her utility at her optimal

choice in your answer.

KM
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