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What is the level of satisfaction a consumer

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Greta is a vegan who loves to make veggie burgers from assorted vegetables and beans. Greta's preferences for protein sources include Lentils (L) and Tofu (T), and are represented by the utility function U = 2L + 6T. Both L and T are measured in KG. Suppose that Greta has $50 to spend on food this week. The grocery store is advertising prices per kg of PL =$4.50 and PT =$12.00. Now she considers their preferences over a different pair of goods x and z. Comparing these two goods, the individual's utility function is U = x1/4z1/2. Income and Px are the same as before, and the price of good z is the same as the price of good y was (PZ is $2).

(a) What is the level of satisfaction a consumer would report if they had the following bundles {x, z} bundles : A = {15, 0}; B = {11, 2}; C = {10, 12}.

(b) How to show that the MRSxZ is equal to z/2x.

(c) How to use the MRS above to find the individual's optimal choice of x and z.

Reference no: EM132471656

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