The following table gives H.B.’s satisfaction from carrots and lettuce. Carrots Lettuce Q

Question: The following table gives H.B.’s satisfaction from carrots and lettuce.

Carrots		Lettuce
Quantity	Utility	Quantity	Utility
0	0	0	0
1	12	1	16
2	21	2	32
3	27	3	46
4	30	4	46
5	30	5	42
6	28	6	36

a. Suppose H.B. has $6 to spend on carrots and lettuce. If the price of a head of lettuce is $2 and the price of a bag of carrots is $1, how many bags of carrots and heads of lettuce will H.B. purchase, using the theory of rational choice? Assume that she is a rational consumer who wants to maximize her utility. Show (explain) how you obtain your answer. [4 CD$]

b. If the price of carrots increases to $2 per bag, how many bags of carrots and heads of lettuce will H.B. now purchase, using the theory of rational choice? Assume that she is a rational consumer who wants to maximize her utility. Show (explain) how you obtain your answer. [2 CD$]

c. Derive either H.B.’s demand schedule or demand curve for carrots. [4 CD$]

Price: $2.99

See Answer: The solution consists of 3 pages
Solution Format: Word Document