16.) Toucan Sam has Cobb-Douglas preferences over Froot Loops and other consumpt

Question

16.) Toucan Sam has Cobb-Douglas preferences over Froot Loops and other consumption. Moreover, he derives his income from selling an endowment of Froot Loops. Previously Toucan Sam consumed 12 bowls of cereal and $1300 of other consumption and Froot Loops sell for $2.99 a box. Toucan Sam invests in an AR-15 and shoots Count Chocula, and Tony the Tiger. Then he poisons the Corn Flakes rooster and burns down the abode of Snap, Crackle and Pop. Now Froot Loops sells for a price of $3.99. Then a plausible new consumption bundle for Toucan Sam would be: (_________ ;_________)

Explanation / Answer

16. The Toucan Sam would be

$2.99*$1300 = $3887.

$3.99*$1300 = $5187.

So plausible new consumption bundle for Toucan Sam would be $3887, $5187.

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