A consumer can choose between goods X and Y. The consumer's utility function is: U=5X2Y2 Use...

A consumer can choose between goods X and Y. The consumer's utility function is: U=5X²Y²

Use following notation, as we have in class:

Price of X = P_X, Price of Y = P_Y, Income = I, the Lagrange multiplier = λ

If P_X= 20, P_Y = 5, and I = 400,

what is the optimal amount of X that will maximize the consumer's utility subject to these prices and income?

what is the optimal amount of Y that will maximize the consumer's utility subject to these prices and income?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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