Ron consumes two goods, X and Y. His utility function is given by U(X,Y) = 33XY....

Ron consumes two goods, X and Y. His utility function is given by U(X,Y) = 33XY. The price of X is $11 a unit; the price of Y is $4 a unit; and Ron has $352 to spend on X and Y.

a. Provide the equation for Ron’s budget line. (Your answer for the budget line should be in the form Y = a – bX, with specific numerical values given for a and b.)

b. Provide the numerical value of Ron’s marginal rate of substitution of X for Y when utility is maximized.

c. Provide the numerical value of Ron’s utility-maximizing amount of X.

d. Provide the numerical value of Ron’s utility-maximizing amount of Y.

e. Provide the numerical value of Ron’s marginal utility of income when utility is maximized.

Expert Solution

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Rahul Sunny answered 1 year ago

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