Suppose NUL students have a monthly income of M1,100, and they allocate half of this amount among two goods; Eggs and Yogurt. Suppose a tray of eggs costs M55 while yogurt costs M22 per case. Suppose Bongile has preference over Eggs (E) and Yogurt (Y) given by the following Cobb-Douglas utility function: U ( E,Y )=E^0.5 Y^2 Given initial prices of eggs and yogurt, and income allocated on both commodities, find the optimal utility maximizing consumption bundles (E*, Y*).
Suppose NUL students have a monthly income of M1,100, and they allocate half of this amount among two goods; Eggs and Yogurt. Suppose a tray of eggs costs M55 while yogurt costs M22 per case. Suppose Bongile has preference over Eggs (E) and Yogurt (Y) given by the following Cobb-Douglas utility function: U ( E,Y )=E^0.5 Y^2 Given initial prices of eggs and yogurt, and income allocated on both commodities, find the optimal utility maximizing consumption bundles (E*, Y*).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose NUL students have a monthly income of M1,100, and they allocate half of this amount among two goods; Eggs and Yogurt. Suppose a tray of eggs costs M55 while yogurt costs M22 per case. Suppose Bongile has preference over Eggs (E) and Yogurt (Y) given by the following Cobb-Douglas utility function: U ( E,Y )=E^0.5 Y^2 Given initial prices of eggs and yogurt, and income allocated on both commodities, find the optimal utility maximizing consumption bundles (E*, Y*).
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