Assume a consumer with the utility function defined over two goods X and Y given by the formula U = 5X-X2 + XY+4Y -0.5Y2. The consumer has an income of 80 money units and the prices of X and Y are respectively Px = 1 and Py = 1.5. What quantities of X and Y maximise utility?

Assume a consumer with the utility function defined over two goods X and Y given by the formula U = 5X-X2 + XY+4Y -0.5Y2. The consumer has an income of 80 money units and the prices of X and Y are respectively Px = 1 and Py = 1.5. What quantities of X and Y maximise utility?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Assume a consumer with the utility function defined over two goods X and Y given by the formula U = 5X-X2 + XY+4Y-0.5Y2. The consumer has an income of 80 money
units and the prices of X and Y are respectively Px = 1 and Py = 1.5. What quantities of X and Y maximise utility?

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