Answered: If the price of good 1 is P₁-$10/unit,…

If the price of good 1 is P₁-$10/unit, the price of good 2 is P2₂=$2/unit, and income is I = $87, what is this consumer's optimal consumption level of good 2?

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

Hand written solutions are strictly prohibited

Suppose a consumer's utility is given by: u (x1, x2) = a√x₁ +b√√x₂
Where a= 5, and b = 5
If the price of good 1 is P₁-$10/unit, the price of good 2 is P2=$2/unit, and
income is I = $87, what is this consumer's optimal consumption level of good
2?
(Note: The answer may not be a whole number, so round to the nearest
hundredth)
(Note: The numbers may change between questions, so read carefully)

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