4. Each day, Hassan's mother packs lunch her son consisting of two items: Twisters (t) ( a kind of candy) and Swiss-chee

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4 Each Day Hassan S Mother Packs Lunch Her Son Consisting Of Two Items Twisters T A Kind Of Candy And Swiss Chee 1 (73.16 KiB) Viewed 28 times

4. Each day, Hassan's mother packs lunch her son consisting of two items: Twisters (t) ( a kind of candy) and Swiss-cheese-slices (s), and these provide him a utility of Ult, s) = tas a. Calculate how much is Hassan more partial to one good than the other. Do you need to know more information, such as the relative price of the two goods, in order to undertake the calculation? = b. [You must set up and use the Lagrangian Equation] If Twisters cost $0.10 each and Swiss-cheese-slices costs $0.5 per slice, how should the mother allocate the lunch budget of $1 to maximize Hassan's utility? c. If the city tries to discourage Twister consumption by increasing the price to $0.40, by how much will Hassan's mother have to increase the lunch budget while keeping Hassan's utility at the same level as in part (b)? d. What is the new optimal bundle (at the higher price for Twisters and the extra lunch budget)?