Mr. Kremer also has a monthly income of $200. His utility function is
U(M,P) =3M+2P
(6 points) Suppose the price of Meat is $10 per pound and the price of Potatoes is $10 per pound. What is the utility maximizing bundle of Meat and Potatoes that Mr. Kremer would consume? What is the level of utility that he attains from this consumption bundle?
(4 points) Now suppose the price of Meat falls to $8 per pound while the price of Potatoes remains at $10 per pound. What is the utility maximizing bundle of Meat and Potatoes that Mr. Kremer would consume? What is the change in his utility compared to part a)?
