A consumer has a monthly income of 1000 dollar that he allocates among two goods: food and clothing. Suppose the price of clothing is pC = 50 and the price of food is pF = 20.
a) Illustrate the various combinations of food and clothing the consumer could afford with his budget. Place food on the horizontal axis.
b) Assume that the consumer’s preferences can be represented by the utility function U(F,C) = F1/2C1/4. Calculate and illustrate graphically the consumer’s optimal choice.
c) Suppose now that food is taxed, causing the price to increase by 50%. Calculate and illustrate graphically the consumer’s new optimal bundle.
d) Suppose instead that food is rationed at a quantity less than the consumer’s desired quantity. Illustrate the consumer’s new optimal bundle.
Please offer step by step working for each part please.
working for the various combinations affordable with his budget (I somehow dont understand how to calculate these)