Assume an individual spends all of the their income on a bundle comprised of good #1 and good #2. In particular, their utility function is given by:U(q1,q2) = q12/3q21/3Assume the price of good #1 is $1 (p1=1) and the price of good #2 is $3 (p2=3). What must the individual's income be if they maximize their utility by purchasing 10 units of good #1?

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Answered: Assume an individual spends all of the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume an individual spends all of the their income on a bundle comprised of good #1 and good #2. In particular, their utility function is given by:

U(q₁,q₂) = q₁^2/3q₂^1/3

Assume the price of good #1 is $1 (p₁=1) and the price of good #2 is $3 (p₂=3). What must the individual's income be if they maximize their utility by purchasing 10 units of good #1?

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