4. Suppose Adam has the utility function u(x, y) = x²y, for which MUx(x, y) = (x, y) = 2xy du and MU, (x, y) = (x, y) = x². a. If his income is 90 and the prices of x and y are 12 and 5, respectively, how much of each good would he demand? b. Rather than solve for specific quantities at specific income and prices, find the general solution, i.e., his demands for x and y as functions of I, px, and py. That is, go through the same steps as in part (a) using the letters I, px, and py instead of 90, 12 and 5.
4. Suppose Adam has the utility function u(x, y) = x²y, for which MUx(x, y) = (x, y) = 2xy du and MU, (x, y) = (x, y) = x². a. If his income is 90 and the prices of x and y are 12 and 5, respectively, how much of each good would he demand? b. Rather than solve for specific quantities at specific income and prices, find the general solution, i.e., his demands for x and y as functions of I, px, and py. That is, go through the same steps as in part (a) using the letters I, px, and py instead of 90, 12 and 5.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:4. Suppose Adam has the utility function u(x, y) = x²y, for which MUx(x, y) = u(x, y) = 2xy
and MU, (x, y) = (x, y) = x².
ди
ду
a.
If his income is 90 and the prices of x and y are 12 and 5, respectively, how much of each good
would he demand?
b. Rather than solve for specific quantities at specific income and prices, find the general solution, i.e.,
his demands for x and y as functions of I, px, and py. That is, go through the same steps as in part (a)
using the letters I, px, and py instead of 90, 12 and 5.
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