Modou has a utility function U(X1,X2) = 2X1 + X2. The prices of X1 & X2 are $1 each and Modou has an income of$20. H ow much X1 and X2 does Modou consume?a. X1 = 10 units and X2 = 10 unitsOb. X1 = 10 units and X2 = 0%3DO c. X1= 20 units and X2 = 0O d.X1 = 0 and X2 = 20 units

Perfect substitutes have linear utility function and when two goods are substitutes, only one of…

Modou has a utility function U(X1,X2) = 2X1 + X2. The prices of X1 & X2 are $1 each and Modou has an income of $20. H ow much X1 and X2 does Modou consume? O a. X1 = 10 units and X2 = 10 units %3D O b.X1 = 10 units and X2 = 0 Oc. X1 = 20 units and X2 = 0 O d.X1 = 0 and X2 = 20 units

Modou has a utility function U(X1,X2) = 2X1 + X2. The prices of X1 & X2 are $1 each and Modou has an income of $20. H ow much X1 and X2 does Modou consume? O a. X1 = 10 units and X2 = 10 units %3D O b.X1 = 10 units and X2 = 0 Oc. X1 = 20 units and X2 = 0 O d.X1 = 0 and X2 = 20 units

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Modou has a utility function U(X1,X2) = 2X1 + X2. The prices of X1 & X2 are $1 each and Modou has an income of
$20. H ow much X1 and X2 does Modou consume?
a. X1 = 10 units and X2 = 10 units
Ob. X1 = 10 units and X2 = 0
%3D
O c. X1
= 20 units and X2 = 0
O d.X1 = 0 and X2 = 20 units

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