Themba has a weekly income of R10, all of which he spends on good X and good Y. The price of X is R1 and the price of Y is R2. His utility from consuming these is U(X)+V(Y). The utility from each of the goods is given by the table below:
X U(X) Y V(Y) 0 0 0 0 1 12 1 20
2 22 2 32
3 26 3 40
4 30 4 44
5 32 5 46
a) At what combination of X and Y does he maximize his utility? (20)
b) Suppose the price of X increases from R1 to R2, at what combination will he maximize his utility? (20)
c) Draw the demand curve for Themba, and explain the factors that will shift this demand curve. (10)