The utility that Lisa gets from ice cream and cake can be described by the following utility function, where I = quantity of ice cream consumed and C = quantity of cake consumed:
Utility Function U=I+C
A. Lisa is given 3 scoops of ice cream and 1 piece of cake. Calculate the total utility she receives from this combination of ice cream and cake.
B. Draw the combinations of cake and ice cream that will make Lisa's total utility 1, 2, and 3, that is, draw indifference curves for these values. Please label your graph carefully. (See Figure 9.5 for guidance)
C. From the shape of Lisa's indifference curve, what can you say about Lisa's preferences? If Lisa has to buy her own cake and ice cream, will she usually buy just cake, just ice cream, or a combination of the goods? What will it depend on?
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