Assume an individual's utility from consuming good #1 and good #2 is given by the following function:U (q1 , q2) = min (q1 , 2q2)Suppose the price of good #1 is $1 (p1=1) and the individual's income is $10 (y=10). If this individual's utility maximizing decision is to purchase 2 units of good #2 (q2=2), what must be the price of good #2?

From the utility function, we can infer q1 and q2 are perfect complements and are consumed in fixed…

Answered: Assume an individual's utility from…

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's utility from consuming good #1 and good #2 is given by the following function:

U (q₁, q₂) = min (q₁ , 2q₂)

Suppose the price of good #1 is $1 (p₁=1) and the individual's income is $10 (y=10). If this individual's utility maximizing decision is to purchase 2 units of good #2 (q₂=2), what must be the price of good #2?

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