Donna and Jim are two consumers purchasing strawberries andchocolates. Jim’s utility function is U (x, y) = xy and Donna’s utilityfunction is U (x, y) = x2y where x denotes strawberries and y denoteschocolates. Jim’s marginal utility functions are MUX=y and MUy=x whileDonna’s are MUX=2xy and MUy=x2. Jim’s income is $100, and Donna’sincome is $150. What is the optimal bundle for Donna if the price ofstrawberries is $2 and the price of chocolate is $4? What is the optimalbundle for Jim, and for Donna, when the price of strawberries rises to$3?
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