Suppose the utility function of U(x1, x2) = x11/2x21/2 and the budget constraint of p1x1+p2x2=m. Let’s assume that p1=$1.5, p2=$2, and m=$60. Find the optimal bundle. Also, specify the optimal bundle.

Suppose the utility function of U(x1, x2) = x11/2x21/2 and the budget constraint of p1x1+p2x2=m. Let’s assume that p1=$1.5, p2=$2, and m=$60. Find the optimal bundle. Also, specify the optimal bundle.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter20: Consumer Choice: Maximizing Utility And Behavioral Economics

Section: Chapter Questions

Problem 1WNG

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Question

Suppose the utility function of U(x₁, x₂) = x₁^1/2x₂^1/2 and the budget constraint of p₁x₁+p₂x₂=m.

Let’s assume that p₁=$1.5, p₂=$2, and m=$60. Find the optimal bundle. Also, specify the optimal bundle.

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