Leo's utility function is U=min(6x,2y). If Leo's income is 6 dollars, the price of good X...

Leo's utility function is U=min(6x,2y). If Leo's income is 6 dollars, the price of good X is 8 and the price of good Y is 7, how many units of good X will Leo buy in order to maximize his utility?

Expert Solution

Preferences are perfect Complements

Two goods are consumed in fixed proportions

6x =2y

3x = y

From BC : 8x + 7y = 6

Put y = 3x

So, 8x + 21x = 6

29x = 6

x* = 6/29

Rahul Sunny answered 2 years ago

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