A consumer's preferences for food (x) and clothing (y) are represented by the utility function Ux,y = x + y^0.5. The prices of food and clothing are Px =4 and Py = 1 euros per unit, respectively, and the consumer's income is m = 8 euros. Calculate the optimal basket.
A consumer's preferences for food (x) and clothing (y) are represented by the utility function Ux,y = x + y^0.5. The prices of food and clothing are Px =4 and Py = 1 euros per unit, respectively, and the consumer's income is m = 8 euros. Calculate the optimal basket.
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
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
Chapter20: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 4CQ
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7. A consumer's preferences for food (x) and clothing (y) are represented by the utility function Ux,y = x + y^0.5. The prices of food and clothing are Px =4 and Py = 1 euros per unit, respectively, and the consumer's income is m = 8 euros. Calculate the optimal basket.
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