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Question #1:
Suppose you spend your daily income ($100) into two goods: foods and other goods (composite goods), and suppose your preference over these two goods are represented by the following utility function: U(x1,x2) = αlnx1 + x2, where α is a constant number.
Let's denote foods as x1 (horizontal axis) and other composite goods as x2 (vertical axis).
If foods price is $5 per unit,
Question #2
In this question you are asked to create a utility function and to find the optimum consumption bundle.
Question #3
Choose one utility function from the following Cobb-Douglas utility functions:
a) U(x,y) = xy
b) U(x,y) = (xy)^1/2
c) U(x,y) = x(y)^1/2
d) U(x,y) = y(x)^1/2
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