Pace University Affordable and Optimal Consumption Bundle Questions

by

Business Finance

only 2 easy questions

1.Suppose Jim considers orange and apple to be perfect two-for-one substitutes and spends $60 income only on these two goods. Orange costs $3.0/lb, while apple costs $4.0/lb. Find Jim’s best affordable bundle (i.e., optimal consumption bundle). 2.Sam spends $24 income on orange juice and apple juice. Orange juice costs $2/cup while apple juice costs $2/cup. Sam views 2 cup of orange juice and 3 cups of apple juice as perfect complements (that is, assume that Sam always drinks two cups of orange juice with three cup of apple juice). Find Sam’s best affordable bundle (i.e., optimal consumption bundle).