7 (a) Assume P₁ = 1, P₂ = 2, Y (income) = 100. Point rationing is in force. Government specifies that when the consumer buys one unit of each good, she must hand over a specified number of ration coupons as well as the money price and she is given an initial endowment of ration coupons. One unit of X₁ requires two coupons and a unit of X₂ requires one coupon, total 100 coupons. Maximize the consumer's utility given that: L B U=X₁ X₂ Show your result in a graph.

7 (a) Assume P₁ = 1, P₂ = 2, Y (income) = 100. Point rationing is in force. Government specifies that when the consumer buys one unit of each good, she must hand over a specified number of ration coupons as well as the money price and she is given an initial endowment of ration coupons. One unit of X₁ requires two coupons and a unit of X₂ requires one coupon, total 100 coupons. Maximize the consumer's utility given that: L B U=X₁ X₂ Show your result in a graph.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 9MC

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7 (a)
Assume P₁ = 1, P₂ = 2, Y (income) = 100. Point rationing is in force.
Government specifies that when the consumer buys one unit of each good,
she must hand over a specified number of ration coupons as well as the
money price and she is given an initial endowment of ration coupons. One
unit of X₁ requires two coupons and a unit of X₂ requires one coupon, total
100 coupons. Maximize the consumer's utility given that:
B
U=X₁ X₂
Show your result in a graph.

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