Ernie’s preferences for apples (qa) and bananas (qb) are captured by the utility function U(qa, qb) = 2qa + 3qb. Ernie has an income of $100. (a) Derive Ernie’s marginal utilities of apples and bananas. (b) Find Ernie’s optimal consumption bundle when the price of an apple is $2 and the price of a banana is $1. (c) Find Ernie’s optimal consumption bundle when the price of an apple is $2 and the price of a banana is $4

Ernie’s preferences for apples (qa) and bananas (qb) are captured by the utility function U(qa, qb) = 2qa + 3qb. Ernie has an income of $100. (a) Derive Ernie’s marginal utilities of apples and bananas. (b) Find Ernie’s optimal consumption bundle when the price of an apple is $2 and the price of a banana is $1. (c) Find Ernie’s optimal consumption bundle when the price of an apple is $2 and the price of a banana is $4

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.11P

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