# Question: question 2 suppose that a particular person consumes only 2...

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Question 2: Suppose that a particular person consumes only 2 goods: DVD rentals and coffee. His utility function is given byU(D,C) = min{D/ 2 ,C}, where is the number of rentals and is the number of cups of coffee. The price of coffee is $9 per cup and the price of one DVD rental is $16 . The consumer has $288 to spend. 1. Write down the person’s budget equation and draw his budget line. Shade the feasible budget set. 2. Draw the indifference curve associated with the consumers preferences. 3. Determine the marginal rate of substitution of coffee for DVD rental. What does the marginal rate of substitution indicate? 4. Determinetheperson’soptimalbundleofcoffeeandDVDrentals. Whatistheutility associated with the optimal bundle?