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:

Invoice

A document issued by a seller to a buyer, detailing products or services provided, prices, and terms of payment.

Cheque

A document that is written, dated, and contains a signature, instructing a bank to pay a certain amount of money to either the person holding it or to an individual named in the document.

Credited

The action of officially recognizing or adding an amount to an account, often referring to the depositing of funds or acknowledgment of income earned.

Account

A record or statement of financial transactions pertaining to an individual, business, or other entity.