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QUESTION 1 For the utility function U = Qx0.50Qy(1-0.50) and the budget 122 = 8Qx + 14Qy find the CHANGE in optimal consumption of 1.7. Please enter your response as a positive number with 1 decimal and 5/4 rounding (e.g. 1.15 1.2, 1.14 = 1.1). if the price of increases by a factor of

QUESTION 1 For the utility function U = Qx0.50Qy(1-0.50) and the budget 122 = 8Qx + 14Qy find the CHANGE in optimal consumption of 1.7. Please enter your response as a positive number with 1 decimal and 5/4 rounding (e.g. 1.15 1.2, 1.14 = 1.1). if the price of increases by a factor of

ENGR.ECONOMIC ANALYSIS
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 1** For the utility function \( U = Q_X^{0.50} Q_Y^{(1-0.50)} \) and the budget \( 122 = 8Q_X + 14Q_Y \), find the CHANGE in optimal consumption of \( Y \) if the price of \( X \) increases by a factor of 1.7. Please enter your response as a positive number with 1 decimal and 5/4 rounding (e.g., 1.15 = 1.2, 1.14 = 1.1). [Input box]
Transcribed Image Text:**Question 1** For the utility function \( U = Q_X^{0.50} Q_Y^{(1-0.50)} \) and the budget \( 122 = 8Q_X + 14Q_Y \), find the CHANGE in optimal consumption of \( Y \) if the price of \( X \) increases by a factor of 1.7. Please enter your response as a positive number with 1 decimal and 5/4 rounding (e.g., 1.15 = 1.2, 1.14 = 1.1). [Input box]
Expert Solution
Step 1: State the information given

The utility function is given as 

U space equals space Q subscript X superscript 0.50 end superscript Q subscript Y superscript left parenthesis 1 minus 0.5 right parenthesis end superscript

The budget is given as 

122 space equals space 8 Q subscript X plus 14 Q subscript Y.

The price of X is increased by a factor of 1.2. 

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