Use the graph below to answer the questions. Ziva is deciding how many fireworks

Question

Use the graph below to answer the questions. Ziva is deciding how many fireworks and toy rockets to buy with her $120. The price of fireworks is $12, and the price of rocket ships is $15. The graph below shows her indifference curves for these two goods. Place the red budget constraint, BC, to show Ziva's consumption possible and the orange point. A, at Ziva's consumption point if she maximizes her utility and answer the three questions below. How much of each good does Ziva consume at these prices? Please answer in whole numbers. Which is the highest level of utility that Ziva car achieve with her budget?

Explanation / Answer

U1 is the highest utility, Ziva can achieve. Because Ziva can buy 5 items of fireworks and 4 items of rockets which is the quantity where 120 can be utilized completely.

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