# Gary the Ghost has the following utility function

Question

1. Gary the Ghost has the following utility function

U(C,S)=C×S,

where C is the amount of candy Gary has and S is the number of bed sheets.

a) Graph Gary’s demand function for candy given that PS =5 and his income is 20. Thegraph should have demand on the vertical axis and PC on the horizontal axis.b) If PC =1, what utility does Gary achieve?c) Using the utility derived in part (b) and PS=5, graph the friendly ghost’s compensated

demand function on the same plot as part (a).d) Explain why the compensated demand function is less steep (the slope is lessnegative) than the demand function you found in part (a).2. Travis the Turkey is preparing for the turkey trot hosted by UCLA Triathlon onNovember 20th. While training, Travis regains strength from consuming protein shakes(S) and energy bars (B). His utility is given by

U(S,B)=ln(2S)+B.a) Are the two goods gross complements or gross substitutes? Does your answer change

depending on which good you consider? (Hint: check both goods)b) Are the two goods net complements or net substitutes?c) What is the demand for S and B given that PS=2, PB=4, and I=34? If we increaseTravis’s turkey trot fund (I), how does he spend this extra money? Given his utilityfunction, explain this behavior.