Let Utility be given by U(x, y) = x2y2With a budget contraint pxx + pyy = yLet px = 10Let py = 2y = 100A) Walk through the optimization process and identify the optimal choice for this consumer in both x and y (Hint: the MUx = 2xy2 and MUy = 2x2yHow much utility is this consumer receiving by consuming the optimal level of x and y?Use your answer in part b,the information from this problem, and excel to draw the budget constraint and the indifference curve at the optimal choice of x and y.

We can do this by setting her marginal utility of each good equal to the price of that good.The…

Answered: Let Utility be given by U(x, y) = x2y2…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Let Utility be given by U(x, y) = x²y²

With a budget contraint p_xx + p_yy = y

Let px = 10

Let py = 2

y = 100

A) Walk through the optimization process and identify the optimal choice for this consumer in both x and y (Hint: the MU_x = 2xy² and MU_y = 2x²y
How much utility is this consumer receiving by consuming the optimal level of x and y?
Use your answer in part b,the information from this problem, and excel to draw the budget constraint and the indifference curve at the optimal choice of x and y.

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