Suppose that Nia spends $300 per year to buy two services. Pedicure (PC) and Stone Massage (SM).
1. Suppose PC costs 30 per visit and SM costs 60 per visit. Write and draw her budget contraint.
2. Suppose Nia's utility function is given by the equation U(PC, SM) = 10PC+ 20SM. What combination of PC and SM should Nia buy to maximize her utility? What is the level of utility?
3. The message shop that Nia goes to has a special promotion. For every 5 massages she buys, she will get a 6th massage for free. Draw her budget constraint.
4. What combination of PC and SM should Nia buy to maximize her utility?