Homework help needed for Economics subject

timer Asked: Oct 17th, 2015

Question description

He likes only Twinkies (t) and soda (s), and these provide him a utility of u(t,s)=sqrt(ts).

a) If Twinkies cost $1 each and soda costs $1.5 per cup, how should Paul spend the $6 his mother gave him to maximize his utility. 

b) If the school tries to discourage Twinkie consumption by increasing price to $4, by how much will Paul's mother have to increase his lunch allowance to provide him with the same level of utility he received in part a?

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