Suppose an individual had a utility function given by: U = X ¹.25 y ¹.5. The price of Good X is $5 and the price of Good Y is $3.75. The individual has a budget of $66. Solve the optimization condition for Y given the values above and fill in the blank below. Y = X

Suppose an individual had a utility function given by: U = X ¹.25 y ¹.5. The price of Good X is $5 and the price of Good Y is $3.75. The individual has a budget of $66. Solve the optimization condition for Y given the values above and fill in the blank below. Y = X

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

Revealed Preferences and Budget Constraint Analysis

Revealed means “Let Out,” and Preference means “Choice”; Choice Reveals Preference.

Question

Suppose an individual had a utility function
given by: U = X ¹.25 y ¹.5. The price of
Good X is $5 and the price of Good Y is
$3.75. The individual has a budget of $66.
Solve the optimization condition for Y given
the values above and fill in the blank below.
Y =
X
(Round to the nearest decimal place if
necessary.)

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