> 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* =
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Im not sure how to solve for part c in particular. Help with formulas may be super helpful
Transcribed Image Text:DROP OFF BU
21
6. DERIVING THE INCOME-CONSUMPTION AND ENGEL CURVES
> 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.
B1: M= 60
PxX* =
PY* =
X* = -
Y* =
U* =
B2: M = 120
PY* =
PxX* =
X* =
Y* = U* = .
's demand curve (D) for X.
EDx =
jon Curve
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