Problem 3 Teddy thinks 1 pancake and 2 spoons of syrup are perfect complements. Let pancake be commodity 1 and syrup be commodity 2. The price of pancake is $1 per unit and the price of syrup is $0.50 per unit. Teddy has $10 to spend on a breakfast of pancake and syrup. Task 1: Find the optimal bundle for Teddy. Task 2: Illustrate the optimal bundle in the commodity space. (Include the budget line and the indifference curve going through the optimal bundle.) Task 3: Suppose Mary has the same preference as Teddy and faces the same prices, but is richer with $25 to spend. What is the aggregate demand for pancake in a world of only Mary and Teddy?
Problem 3 Teddy thinks 1 pancake and 2 spoons of syrup are perfect complements. Let pancake be commodity 1 and syrup be commodity 2. The price of pancake is $1 per unit and the price of syrup is $0.50 per unit. Teddy has $10 to spend on a breakfast of pancake and syrup. Task 1: Find the optimal bundle for Teddy. Task 2: Illustrate the optimal bundle in the commodity space. (Include the budget line and the indifference curve going through the optimal bundle.) Task 3: Suppose Mary has the same preference as Teddy and faces the same prices, but is richer with $25 to spend. What is the aggregate demand for pancake in a world of only Mary and Teddy?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 3SQP
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Transcribed Image Text:Problem 3
Teddy thinks 1 pancake and 2 spoons of syrup are perfect complements. Let
pancake be commodity 1 and syrup be commodity 2. The price of pancake is $1 per
unit and the price of syrup is $0.50 per unit. Teddy has $10 to spend on a breakfast of
pancake and syrup.
Task 1: Find the optimal bundle for Teddy.
Task 2: Illustrate the optimal bundle in the commodity space. (Include the budget
line and the indifference curve going through the optimal bundle.)
Task 3: Suppose Mary has the same preference as Teddy and faces the same
prices, but is richer with $25 to spend. What is the aggregate demand for pancake in
a world of only Mary and Teddy?
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