Answer to Question #24090 in Macroeconomics for Annette

Question

Question 1
To get through his school week, Mark consumes only liters of diet coke (C) and Wawa subs (S). He
has a fixed budget of $ dollars to spend on food each day (money is non-transferable across days).
Mark’s goal is to maximize his utility, U, each day of the week subject to his budget constraint. His
preferences over diet coke and Wawa subs depend on the day of the week:
a. Compute Mark’s demand functions C* and S* for each day of the week.
b. Assume that liters of diet coke are $2 each and Wawa subs are $5 each. Mark’s fixed budget for
food is $10 a day. How many liters of diet coke and Wawa subs will Mark demand?
c. In celebration of the first day of snow, Wawa decides to have a big sale on its subs where the price
of subs is now $1 each. Mark’s fixed budget for food is the same as before. How many liters of diet
coke and Wawa subs will Mark demand

Answer 1

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