What is optimal bundle of cups of coffee-dozens of donuts

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Consider Bob who only consumes donuts and coffee in fixed proportions. Bob consumes 2 donuts with each cup of coffee.

Write down a utility function that is consistent with Bob's preferences. Graph the indifference curves from part a with coffee on the horizontal axis. Write down a utility function that is consistent with Bob's preferences, however, a unit of donuts is now a dozen donuts (hence, bob consumes 1/6 units of donuts per cup of coffee. Graph the indifference curves from part c with coffee on the horizontal axis. If a dozen donuts cost $6 ($0.50 per donut) and a cup of coffee costs $2 and Bob has an income of $100, what is his optimal bundle of cups of coffee and dozens of donuts?

Reference no: EM131240905

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