> Nikki's utility function is the same as in problem 5: U(X, Y) = XY2 > Prices are Px = 4 and Py = 4. a. Write the budget equations for each of two possible levels of income. B;: M = 60 Y = B2: M = 120 Y = b. Find and simplify the tangency condition for an optimum. Y = c. For each budget equation, calculate optimal X*, Y*, and U*. Also calculate Nikki's weekly expenditure on each good. B:: M= 60 U* = PX* = PY* = X* =_ Y* = - B2: M = 120 PxX* = - PYY* = X* =- Y* = U* =

> Nikki's utility function is the same as in problem 5: U(X, Y) = XY2 > Prices are Px = 4 and Py = 4. a. Write the budget equations for each of two possible levels of income. B;: M = 60 Y = B2: M = 120 Y = b. Find and simplify the tangency condition for an optimum. Y = c. For each budget equation, calculate optimal X, Y, and U. Also calculate Nikki's weekly expenditure on each good. B:: M= 60 U = PX* = PY* = X* =_ Y* = - B2: M = 120 PxX* = - PYY* = X* =- Y* = U* =

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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