X2 Phil has preferences over olives (x₁) and ice creams (x₂) with a utility function, u(x₁, x₂)= x₁0.5+ x₂0.5. Suppose his income is $16 and the price of olives is $1 and the price of ice creams is $1, too. Which of the following is TRUE? O The utility level when he spends all of his income on good 1 is 8. O The optimal bundle Phil will choose to consume is (6,10). O The utility level at a bundle (1,16) is 11. None of the above. The optimal bundle Phil will choose to consume is (8,8).
X2 Phil has preferences over olives (x₁) and ice creams (x₂) with a utility function, u(x₁, x₂)= x₁0.5+ x₂0.5. Suppose his income is $16 and the price of olives is $1 and the price of ice creams is $1, too. Which of the following is TRUE? O The utility level when he spends all of his income on good 1 is 8. O The optimal bundle Phil will choose to consume is (6,10). O The utility level at a bundle (1,16) is 11. None of the above. The optimal bundle Phil will choose to consume is (8,8).
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 6SQP
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Transcribed Image Text:X2
Phil has preferences over olives (x₁) and ice
creams (x₂) with a utility function, u(x₁, x₂)=
x₁0.5+ x₂0.5. Suppose his income is $16 and the
price of olives is $1 and the price of ice creams
is $1, too. Which of the following is TRUE?
O The utility level when he spends all of his income
on good 1 is 8.
O The optimal bundle Phil will choose to consume is
(6,10).
O The utility level at a bundle (1,16) is 11.
None of the above.
The optimal bundle Phil will choose to consume is
(8,8).
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