2 An individual's utility function is given by U = x;X2 where x, and x, denote the number of items of two goods, G1 and G2. The prices of the goods are $2 and $10 respectively. Assuming that the individual has $400 available to spend on these goods, find the utility-maximizing values of x, and x2. Verify that the ratio of marginal utility to price is the same
2 An individual's utility function is given by U = x;X2 where x, and x, denote the number of items of two goods, G1 and G2. The prices of the goods are $2 and $10 respectively. Assuming that the individual has $400 available to spend on these goods, find the utility-maximizing values of x, and x2. Verify that the ratio of marginal utility to price is the same
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter20: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 3WNG
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![2 An individual's utility function is given by
U = x,x2
where x, and x, denote the number of items of two goods, G1 and G2. The prices of the goods are $2
and $10 respectively. Assuming that the individual has $400 available to spend on these goods, find
the utility-maximizing values of x, and X2. Verify that the ratio of marginal utility to price is the same
for both goods at the optimum.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F903a404e-ebf0-4cb0-8a14-19a016d5ecf5%2F3e2396a7-c26d-4fa0-a86e-3243db2307ca%2F2r70iz_processed.png&w=3840&q=75)
Transcribed Image Text:2 An individual's utility function is given by
U = x,x2
where x, and x, denote the number of items of two goods, G1 and G2. The prices of the goods are $2
and $10 respectively. Assuming that the individual has $400 available to spend on these goods, find
the utility-maximizing values of x, and X2. Verify that the ratio of marginal utility to price is the same
for both goods at the optimum.
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