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Mr
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)?
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