Each day Paul, who is in third grade, eats lunch at school. He likes only twinikies (t) and soda (s), and these provide him a utility of
utility = U(t,s)=(ts)^1/2
a. If twinkies cost $0.10 each and soda costs $0.25 per cup, how should paul spend the $1 his mother gave him to maximize his utility?
b. If the school discourages twinkie consumption by increasing the price to $0.40, by how much will paul's mother have to increase his lunch allowance to provide him with the same level of utility he recieved in part (a.)?