2. Tom spends all his $100 weekly income on two goods, apples and bananas. His utility function is given by U (A, B) = AB, where A and B stand for the quantity of apples and bananas consumed by Tom. If PA = $4 and PB= $10, how many apples and bananas will he consume? Make sure you write out the utility maximization problem explicitly, including the decision variable(s). What if his utility function is given by U (A, B) = A0.5B 0.5?
2. Tom spends all his $100 weekly income on two goods, apples and bananas. His utility function is given by U (A, B) = AB, where A and B stand for the quantity of apples and bananas consumed by Tom. If PA = $4 and PB= $10, how many apples and bananas will he consume? Make sure you write out the utility maximization problem explicitly, including the decision variable(s). What if his utility function is given by U (A, B) = A0.5B 0.5?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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2. Tom spends all his $100 weekly income on two goods, apples and bananas. His utility function is given by U (A, B) = AB, where A and B stand for the quantity of apples and bananas consumed by Tom. If PA = $4 and PB= $10, how many apples and bananas will he consume? Make sure you write out the utility maximization problem explicitly, including the decision variable(s). What if his utility function is given by U (A, B) = A0.5B 0.5?
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