An individual's utility function is given by: U (q1 , q2) = q11/2 . q2Suppose we know that the individual is maximizing their utility by consuming 9 units of good #1 (q1=9) and six units of good #2 (q2=6). If the current price for good #1 is $1 (p1=1), what must be the price of good #2 (p2) and what must be the individual's current income (y) available to spend on the two goods?a.) p2 =b.) y=

The consumer is consuming two goods. In case of two goods, consumption is optimized when marginal…

Answered: An individual's utility function is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An individual's utility function is given by: U (q₁, q₂) = q₁^1/2. q₂

Suppose we know that the individual is maximizing their utility by consuming 9 units of good #1 (q₁=9) and six units of good #2 (q₂=6). If the current price for good #1 is $1 (p1=1), what must be the price of good #2 (p2) and what must be the individual's current income (y) available to spend on the two goods?

a.) p₂ =

b.) y=

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