A consumer has a daily income of $240 to buy two goods (X, Y). The price of X is $8 and the price of Y is $3. The consumer utility function is given by U(X,Y)= X²Y¹/2 You are also told that his marginal utilities are MUX = 2XY¹/2 MUY = 1. Calculate the optimal quantity of good X and Y for this consumer. 2. Suppose this consumer decides to consume only 25 units of good Y while remaining with the same utility bundle level found in question (1). Find the new level of good X?
A consumer has a daily income of $240 to buy two goods (X, Y). The price of X is $8 and the price of Y is $3. The consumer utility function is given by U(X,Y)= X²Y¹/2 You are also told that his marginal utilities are MUX = 2XY¹/2 MUY = 1. Calculate the optimal quantity of good X and Y for this consumer. 2. Suppose this consumer decides to consume only 25 units of good Y while remaining with the same utility bundle level found in question (1). Find the new level of good X?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 5SQP
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![PROBLEM 2 (
A consumer has a daily income of $240 to buy two goods (X, Y). The price of X is $8 and the price of Y is $3. The
consumer utility function is given by
U(X,Y) = X2y1/2
You are also told that his marginal utilities are
MUX
= 2XY¹/2
MUy = (X²)
1. Calculate the optimal quantity of good X and Y for this consumer.
2.
Suppose this consumer decides to consume only 25 units of good Y while remaining with the same utility
bundle level found in question (1). Find the new level of good X?
ANSWER](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F79bc45cc-1cf1-45b0-82bf-8fd252e9d638%2Fe11fbae2-6a41-49c0-af45-0012100faa33%2Fcokhlat_processed.jpeg&w=3840&q=75)
Transcribed Image Text:PROBLEM 2 (
A consumer has a daily income of $240 to buy two goods (X, Y). The price of X is $8 and the price of Y is $3. The
consumer utility function is given by
U(X,Y) = X2y1/2
You are also told that his marginal utilities are
MUX
= 2XY¹/2
MUy = (X²)
1. Calculate the optimal quantity of good X and Y for this consumer.
2.
Suppose this consumer decides to consume only 25 units of good Y while remaining with the same utility
bundle level found in question (1). Find the new level of good X?
ANSWER
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