What combination of meat and vegetables should he buy

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Reference no: EM133340768

Question: Tangping has weekly wage of 6000 RMB. He spends all his weekly wage on meat (M) and vegetables (V) and he keeps following a balanced diet.

a. Assume that a kilo of meat costs 60 RMB and a kilo of vegetables costs 20 RMB. Please draw a graph to show his budget constraint.

b. In addition, assume that Tangping's utility function is U(M, V) =min(4M, 3\}. What combination of meat and vegetables should he buy to maximize his utility?

C. Now the price of a kilo of meat increases to 80 RMB, since the price of pannage increases, find his new budget constraint. Please draw his indifference curve and his new budget constraint on a graph. And find the optimal combination of meat and vegetables that maximizes his utility.

Reference no: EM133340768

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