Casper Consumes Cocoa and Cheese

question 63

Essay

Casper consumes cocoa and cheese.Cocoa is sold in an unusual way.There is only one supplier, and the more cocoa you buy from him, the higher the price you have to pay per unit.In fact y units of cocoa will cost Casper y² dollars.Cheese is sold in the usual way at a price of 2 dollars per unit.Casper's income is 20 dollars and his utility function is U(x, y)= x + 2y, where x is his consumption of cheese and y is his consumption of cocoa.
a.Sketch Casper's budget set and shade it in.
b.Sketch some of his indifference curves and label the point that he chooses.
c.Calculate the amount of cheese and the amount of cocoa that Casper demands at these prices and this income.

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Definitions:

Foreign Producers

Manufacturers or producers located in a country or jurisdiction different from where their products are sold or consumed.

Wage Increases

Adjustments or rises in the amount of money that workers are paid for their labor, often seen as a reflection of economic growth or inflation.

Real Wages

Wages adjusted for inflation, representing the purchasing power of the income received by workers.

U.S. Automobile

Vehicles manufactured by companies based in the United States, typically referring to cars and trucks.