Describe the utility maximising consumption bundle

Reference no: EM133440490

Question: Professor Egghead consumes only two goods, large (600g) eggs (x) and jumbo (800g) eggs (y) . He cares only about the total weight of the eggs he consumes, so his utility function is U(x, y) = 3x + 4y. Being a professor, he has an income of $120. (a) (Level A) Draw an indifference curve of Professor Egghead. (b) (Level B) Suppose large eggs costs $5 a dozen and jumbo eggs costs $8 a dozen. With the aid of a diagram, find Professor Egghead's utility maximising consumption bundle. (c) (Level B) Now jumbo eggs are on sale and each dozen costs only $6. The price of large eggs remains at $5 per dozen. Using a separate diagram, find Professor Egghead's new utility maximising consumption bundle. (d) (Level B) Later, the price of jumbo eggs goes back to $8 a dozen. Meanwhile, the price of large eggs increases to $6 per dozen. Using a separate diagram, describe the utility maximising consumption bundle(s) for Professor Egghead.

Reference no: EM133440490

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