Suppose that the price of good X is $6 and the price of good Y is $2. You have $144 to spend and your preferences over X and Y are defined as:U(x, y) = x^(2/3)y^(1/3)1. Calculate the marginal utility of X.2. Calculate the marginal utility of Y.3. What is the optimal choice of X and Y given PX = $6, PY = $2, and I = $144?If income is increased to $150, calculate how the optimal choice of X and Y changes.

Answered: Calculate the Marginal Utility of Y…

Calculate the Marginal Utility of Y What is the optimal Choice of X and Y given the PX = $6, PY = $2 and I = $144 || If Income is increased to $150 calculate how the optimal choice of X and Y change

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose that the price of good X is $6 and the price of good Y is $2. You have $144 to spend and your preferences over X and Y are defined as:

U(x, y) = x^(2/3)y^(1/3)

1. Calculate the marginal utility of X.
2. Calculate the marginal utility of Y.
3. What is the optimal choice of X and Y given PX = $6, PY = $2, and I = $144?

If income is increased to $150, calculate how the optimal choice of X and Y changes.

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