6. Sarah likes food, z and clothing, y and has the following utility function: U(x,y) = 2x!/2y}/2. The price of food is 1 and the price of clothing is 4. Her income is 160. Due to a sudden shock to crops, the price of food increases to 4. What is now the minimum budget that Sarah would need to reach the same level of utility that she enjoyed before the price change?

6. Sarah likes food, z and clothing, y and has the following utility function: U(x,y) = 2x!/2y}/2. The price of food is 1 and the price of clothing is 4. Her income is 160. Due to a sudden shock to crops, the price of food increases to 4. What is now the minimum budget that Sarah would need to reach the same level of utility that she enjoyed before the price change?

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter7: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 4CQ

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