4. If an individual's utility function for coffee (x) and cream (y) is given by U(x, y) = min (x, 5y), write the demand function for coffee .

Answer 1

3. Suppose an individual's MRS (of steak for beer) is 2s/b and this person is currently consuming equal amounts of steak and beer. Suppose also that the price of a steak is $1 and a beer is $4. Then what should the individual do in order to increase utility? Explain in 3-5 sentences.