What is anna optimal choice of comic books and aog

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Reference no: EM13149743

Assume that Anna has an entertainment budget of $5,000, and she spends her income on comic books (X) and all other goods (AOG) (Y). The price of a comic book is $5, and the price of AOG is $1/unit. Her preferences can be represented by convex indifference curves: U(X,Y) = (X*Y)1/2 , and her MRS of X for Y = Y/X. What is Anna’s optimal choice of comic books and AOG? Illustrate her optimal choice on a graph, using indifference curve-budget line analysis.

Reference no: EM13149743

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