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Consider a consumer with the following utility function U(2,3)=20.8.0.2 Assume that the consumer faces a price of pr = 3 for x, Py = 1 for y, and a total income of I = 150. 1. What is the marginal rate of subsitution? 2. Find the optimal consumption bundle. Label it bundle A. 3. What are the optimal levels of A, YA, and U (A, YA)?

Consider a consumer with the following utility function U(2,3)=20.8.0.2 Assume that the consumer faces a price of pr = 3 for x, Py = 1 for y, and a total income of I = 150. 1. What is the marginal rate of subsitution? 2. Find the optimal consumption bundle. Label it bundle A. 3. What are the optimal levels of A, YA, and U (A, YA)?

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Consider a consumer with the following utility function U(2,y)= 0.8 . 0.2 Assume that the consumer faces a price of pr = 3 for x, Py = 1 for y, and a total income of I = 150. 1. What is the marginal rate of subsitution? 2. Find the optimal consumption bundle. Label it bundle A. 3. What are the optimal levels of A, YA, and U (A, YA)?
Transcribed Image Text:Consider a consumer with the following utility function U(2,y)= 0.8 . 0.2 Assume that the consumer faces a price of pr = 3 for x, Py = 1 for y, and a total income of I = 150. 1. What is the marginal rate of subsitution? 2. Find the optimal consumption bundle. Label it bundle A. 3. What are the optimal levels of A, YA, and U (A, YA)?
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