a)
To find: Quantity of Twinkies and soda that maximizes utility.
a)
![Check Mark](/static/check-mark.png)
Explanation of Solution
Therefore, to maximize utility there should be 5 Twinkie and 2 soda.
b)
To find: The calculation of new allowance.
b)
![Check Mark](/static/check-mark.png)
Explanation of Solution
After inserting the t and s function in the budget constraint:
The allowance should increase from $ 1 to $2.
Want to see more full solutions like this?
Chapter 4 Solutions
Microeconomic Theory
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage LearningPrinciples of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337617406/9781337617406_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781947172364/9781947172364_smallCoverImage.jpg)