Question
In: Economics
Dwayne Michael Carter Junior purchases only two goods, apples (a) and kumquats (k). His income is...
Dwayne Michael Carter Junior purchases only two goods, apples (a) and kumquats (k). His income is $40. Apples cost $2 per pound and kumquats cost $4 per pound. His utility function is U(a,k) = 3a 2 + 5k. What bundle of goods should he purchase to maximize his utility? Why? Draw and label a diagram with indifference curves, a budget constraint, and the optimal bundle. Solve using the Lagrangian method.
Solutions
Expert Solution
Given:-
Income = $40
Cost of apple per pound = $2
Cost of kumquats per pound = 4$
Let the quantity of apples purchased be 'a' and kumquats be 'k'
Rahul Sunny answered 1 year agoRelated Solutions
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