In: Economics
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 = PX, Price of Y = PY, Income = I, the Lagrange multiplier = λ
If PX= 20, PY = 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?