Cocoa has utility function given by the expression

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Reference no: EM131162899

Cocoa consumes two goods, X and Y. Cocoa has a utility function given by the expression:

U = X + 5Y

a. Plot an indifference curve representing Cocoa’s preferences. Label 3 points.

b. Derive demand functions for X and Y, using Px as the price of X, Py as the price of Y and I as income.

c. If the current prices of X and Y are $10 and $5, respectively, and Cocoa currently has an income of $500, how much X and Y will maximize her utility?

d. Under what circumstances would Cocoa alter the relative amounts of X and Y she consumes.

Reference no: EM131162899

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