Assume an individual's utility function is given by the following expression, where a and b are constants: U(9₁,92) = a q1 + b.q2 Assume the individual has $12 (y = 12) to spend on a bundle of q₁ and q2 and assume the price of good #1 is $4 (p₁ = 4). If the price of good #2 is greater than $2 (p₂ > 2), then this individual will maximize their utility by consuming 3 units of good #1 (9₁ = 3). However, if the price of good #2 is less than $2 (p₂ < 2), this individual will maximize their utility by consuming zero units of good #1 (91 = 0). Given this information, what is the value of the fraction ()?

Assume an individual's utility function is given by the following expression, where a and b are constants: U(9₁,92) = a q1 + b.q2 Assume the individual has $12 (y = 12) to spend on a bundle of q₁ and q2 and assume the price of good #1 is $4 (p₁ = 4). If the price of good #2 is greater than $2 (p₂ > 2), then this individual will maximize their utility by consuming 3 units of good #1 (9₁ = 3). However, if the price of good #2 is less than $2 (p₂ < 2), this individual will maximize their utility by consuming zero units of good #1 (91 = 0). Given this information, what is the value of the fraction ()?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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