4. Tyrone spends his entire income on two goods, X, and Y. His utility function is U=XY, and the market prices for X and Y are identical (Px=PY). The equation for Tyrone's income-consumption curve is a) Y=X. b) Y=1. c) X=1. d) MUx/MUY. e) indeterminate given this information.
4. Tyrone spends his entire income on two goods, X, and Y. His utility function is U=XY, and the market prices for X and Y are identical (Px=PY). The equation for Tyrone's income-consumption curve is a) Y=X. b) Y=1. c) X=1. d) MUx/MUY. e) indeterminate given this information.
Chapter6: Demand Relationships Among Goods
Section: Chapter Questions
Problem 6.8P
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Transcribed Image Text:4. Tyrone spends his entire income on two goods, X, and Y. His utility function is U=XY, and the
market prices for X and Y are identical (Px-Py). The equation for Tyrone's income-consumption
curve is
а) Y-X.
b) Y=1.
c) X=1.
d) MUx/MUY.
e) indeterminate given this information.
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